Christian Health Care v. Dhss

• Decision Date: 06 July 2007
• Docket Number: No. WD 66710.,WD 66710.
• Citation: 229 S.W.3d 270
• Parties: STATE of Missouri ex rel. CHRISTIAN HEALTH CARE OF SPRINGFIELD, INC., et al., Appellants, v. MISSOURI DEPARTMENT OF HEALTH AND SENIOR SERVICES and R.H. Montgomery Properties, Inc., Respondents.
• Court: Missouri Court of Appeals

229 S.W.3d 270

STATE of Missouri ex rel. CHRISTIAN HEALTH CARE OF SPRINGFIELD, INC., et al., Appellants, v. MISSOURI DEPARTMENT OF HEALTH AND SENIOR SERVICES and R.H. Montgomery Properties, Inc., Respondents.

No. WD 66710.

Missouri Court of Appeals, Western District.

July 6, 2007.

Richard D. Watters and Katie C. Pawlitz, St. Louis, Terry C. Allen, Jefferson City, for Appellants.

Jeremiah W. (Jay) Nixon, Atty. Gen., Kathleen R. Robertson, Asst. Atty. Gen., Jefferson City, for Missouri Department of Health and Senior Services.

James B. Deutsch and Jane A. Smith, Jefferson City, for R.H. Montgomery Properties, Inc.

Before ULRICH, P.J., and LOWENSTEIN and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

Christian Health Care of Springfield East, Inc.; Christian Health Care of Springfield West, Inc.; Christian Health Care of Nixa, Inc.; Regional Care of Republic, LLC; James River Care Center, Inc.; Springfield Care Center, LLC; Magnolia Care Center, LLC; Skilled Health Facilities, Inc.; and Springfield Residential Center, Inc., appeal the dismissal of their petition, by the Circuit Court of Cole County, seeking a writ of mandamus¹ ordering the Missouri Department of Health and Senior Services (DHSS) to revoke the license it issued, pursuant to § 198.022,² on January 17, 2006, retroactive to January 11, 2006, to the respondent, R.H. Montgomery Properties, Inc. (Montgomery), to operate The Neighborhoods of Quail Creek (Quail Creek) as a skilled nursing facility. As a basis for their writ, the appellants alleged that the DHSS, as a matter of law, should not have issued a license to Montgomery to operate Quail Creek as a skilled nursing facility because a Certificate of Need (CON), which is required by § 197.315.3 to be issued by the Missouri Health Facilities Review Committee (MHFRC) before the DHSS can issue a license to operate, pursuant to § 198.022, had never been obtained by Montgomery for the facility. They alleged that the CON that was issued by the MHFRC was not for the facility that was actually constructed by Montgomery. Hence, the appellants, in their petition, were not attacking the issuance of the CON that was, in fact, issued by the MHFRC to Montgomery, but rather, they were attacking the fact that no CON was ever issued for the facility which Montgomery sought to license. Although the appellants, in their petition, were clearly attacking the issuance of a license by the DHSS to Montgomery to operate Quail Creek, as constructed, on the basis that a statutory condition precedent for issuance of such license had not been satisfied, the issuance of a CON for the same facility for which the license was sought, the trial court dismissed the petition because it found that the appellants lacked standing to challenge the issuance by the MHFRC of the CON that was issued to Montgomery to operate Quail Creek.

On appeal, the appellants are claiming that the trial court, in dismissing their petition for a lack of standing to challenge the issuance of the CON to Montgomery, misunderstood the issue that was presented by their petition. They claim that the trial court's basis for dismissing their petition incorrectly assumed that they were challenging the issuance of the CON by the MHFRC, when, in fact, they were challenging the issuance of the license by the DHSS, without Montgomery having first obtained, as required by § 197.315.3, a CON as to the actual facility for which the license was being sought. Accordingly, they claim that the fact they did not have standing to challenge the issuance of the CON in question is a red herring and, as a matter of law, cannot stand as a legal basis for dismissing their petition. With that as a backdrop, the appellants raise one point on appeal. They claim that the trial court erred in dismissing their petition seeking a writ of mandamus, for a lack of standing to challenge the issuance of the CON by the MHFRC. Apparently realizing that, even if we agree that the trial court's basis for dismissing for a lack of standing was in error, we still must affirm if its ruling as to standing on any other basis is correct, they claim that they do, in fact, have standing to challenge the issuance of a license by the DHSS to Montgomery to operate Quail Creek because as a competitor of Montgomery they had a vested interest in ensuring that they did not have to compete against illegal competition.

We affirm.

Facts

In order to build a new health care facility in this state, § 197.315.1 provides that a party must first obtain a CON from the MHFRC. As constrained by § 197.315.2, the MHFRC can only issue a CON if it determines that the new facility is "needed." To that end, on November 12, 2002, Montgomery filed an application for a CON for Quail Creek, to be located in Springfield, Missouri. In its CON application, Montgomery stated that Quail Creek, when constructed, would not exceed 35,000 square feet, would contain 103 beds and cost approximately $3.8 million to construct. On December 27, 2002, the MHFRC approved Montgomery's application and, on January 3, 2003, issued it a CON for Quail Creek.

Soon after the CON for Quail Creek was issued, Montgomery began construction. As required by § 197.315.8, Montgomery filed progress reports every six months with the MHFRC. The July 2005 report indicated that Quail Creek was over budget, with an estimated final cost of approximately $7.1 million, and that the square footage had expanded to approximately 45,000 square feet, 10,000 square feet over the square footage on which the issuance of the CON was based.

With its July 2005 progress report, Montgomery filed a "cost overrun" application seeking the approval of the MHFRC for the changes in the allowed cost and square footage of the facility. On September 19, 2005, the MHFRC denied Montgomery's application for a "cost overrun." On October 12, 2005, pursuant to § 197.335, Montgomery filed its notice of appeal with the Administrative Hearing Commission (AHC) seeking review of the MHFRC's decision to deny its "cost overrun" application.

On December 16, 2005, the appellants filed a petition in the Circuit Court of Cole County, seeking a writ of prohibition to prohibit DHSS from issuing Montgomery a license to operate Quail Creek or, in the alternative, if a licensed had already been issued, a writ of mandamus requiring the DHSS to revoke Montgomery's license. The appellants' petition alleged, as a basis for relief, that the DHSS could not issue or, in the alternative, should not have issued, Montgomery a license to operate Quail Creek because Montgomery did not have a CON for the facility that was actually constructed. In other words, except in name only, they were claiming that the facility being licensed was not the same facility for which the requisite CON had been issued. On December 16, 2005, the trial court issued a "stipulated order in prohibition," which prohibited DHSS from issuing Montgomery a license to operate Quail Creek until further order of the court or until the AHC issued a final decision in Montgomery's appeal of its denial of its application for a "cost overrun."

On December 21, 2005, Montgomery filed a motion to intervene in the appellants' case against the DHSS in the circuit court and a motion to dismiss the appellants' petition due to a lack of subject matter jurisdiction, alleging that they lacked standing to challenge the issuance of the CON by the MHFRC to Montgomery to construct Quail Creek. The trial court sustained Montgomery's motion to intervene. And, on December 30, 2005, after a hearing on Montgomery's motion to dismiss, the trial court dismissed the appellants' petition on the basis that the controversy was not ripe for adjudication in that DHSS had not yet issued Montgomery a license to operate Quail Creek.

On January 17, 2006, Montgomery dismissed its appeal before the AHC of the MHFRC's denial of its application for a "cost overrun." On the same day, the DHSS issued a license to Montgomery to operate Quail Creek, retroactive to January 11, 2006, which was still under construction at that time. On January 19, 2006, the appellants filed an amended motion for reconsideration of its original petition, alleging that the controversy was now ripe for adjudication in that the DHSS had issued a license to Montgomery to operate Quail Creek. On January 27, 2006, the trial court took up and heard the appellants' motion for reconsideration, which it granted and ordered its prior dismissal set aside. On January 31, 2006, after a recusal of judge for a conflict of interest and the assignment of a new judge, the trial court took up Montgomery's motion to dismiss for a lack of standing by the appellants to challenge the issuance, by the DHSS, of the license to Montgomery to operate Quail Creek. The motion to dismiss was sustained for a lack of standing to contest the CON issued to Montgomery by the MHFRC.

This appeal follows.

I.

In their sole point on appeal, the appellants claim that the trial court erred in dismissing their petition for a writ of mandamus, asking the court to order the DHSS to revoke the license it issued to Montgomery to operate Quail Creek as a skilled nursing facility, for a lack of standing to challenge the MHFRC's issuance of the CON to Montgomery to build the facility, because standing to challenge the issuance of the CON, as a matter of law, was irrelevant in the determination of the writ. While we agree with the appellants that whether they had standing to challenge the CON issued to Montgomery to construct Quail Creek was irrelevant to the trial court's determination of their writ, such that it could not be used as a legal basis for dismissing their petition, because we find that they lacked standing as to the relevant issue presented by their petition, whether the license should have been issued by the DHSS to Montgomery to operate the facility, we nonetheless affirm the trial court's dismissal of the appellants' petition for a lack of...