Condell Hosp. v. Health Facilities Planning Bd.

• Decision Date: 29 September 1987
• Docket Number: No. 87-1537,87-1537
• Citation: 515 N.E.2d 750,113 Ill.Dec. 765,161 Ill.App.3d 907
• Parties: , 113 Ill.Dec. 765, 43 Ed. Law Rep. 266 CONDELL HOSPITAL, Lake Forest Hospital, Victory Memorial Hospital, Lutheran General Hospital, Inc., and St. Therese Medical Center, Appellants, v. The HEALTH FACILITIES PLANNING BOARD, the Department of Public Health, Chicago Medical School Hospital, Inc., and University Health Sciences/Chicago Medical School, Appellees. HIGHLAND PARK HOSPITAL and Good Shepherd Hospital, Appellants, v. The HEALTH FACILITIES PLANNING BOARD, the Department of Public Health, Chicago Medical School Hospital, Inc., and University Health Sciences/Chicago Medical School, Appellees.
• Court: United States Appellate Court of Illinois

Page 750

515 N.E.2d 750

161 Ill.App.3d 907, 113 Ill.Dec. 765,

43 Ed. Law Rep. 266

CONDELL HOSPITAL, Lake Forest Hospital, Victory Memorial

Hospital, Lutheran General Hospital, Inc., and St.

Therese Medical Center, Appellants, v. The HEALTH FACILITIES PLANNING BOARD, the Department of

Public Health, Chicago Medical School Hospital,

Inc., and University Health

Sciences/Chicago Medical

School, Appellees.

HIGHLAND PARK HOSPITAL and Good Shepherd Hospital, Appellants, v. The HEALTH FACILITIES PLANNING BOARD, the Department of

Public Health, Chicago Medical School Hospital,

Inc., and University Health

Sciences/Chicago Medical

School, Appellees.

No. 87-1537.

Appellate Court of Illinois,

First District, Second Division.

Sept. 29, 1987.

Katten, Muchin & Zavis, Chicago (Steven L. Bashwiner, W. Edward Webb, Laurence H. Lenz, Jr., Seth R. Madorsky, of counsel), for appellants.

Neil Hartigan, Atty. Gen. (Lance T. Jones, Asst. Atty. Gen., of counsel), Bell, Boyd & Lloyd (Jeffrey R. Ladd, Lawrence M. Gavin, Daniel J. Lawler, of counsel), Boodell, Sears, Giambalvo & Crowle (Jeffrey R. Ladd, Lawrence M. Gavin, Daniel J. Lawler, of counsel), Shea, Rogal & Assoc., Ltd., Chicago (Gerald W. Shea, Iral A. Rogal, of counsel), for appellees.

Justice STAMOS delivered the opinion of the court:

The two groups of appellant hospitals ("the Condell appellants" and "the Highland Park appellants") jointly appeal from dismissals of their two respective complaints for administrative review of a decision by appellee board ("the Board" or "the State Board") to issue a permit to appellees Chicago Medical School Hospital, Inc., and University Health Sciences/Chicago Medical School ¹ (collectively "CMS") for construction of a hospital in Lake County, Illinois. The two cases had been consolidated in the circuit court. Appellee department ("the Department"), which was a party of record to the proceedings before the Board, was joined as a defendant in each case pursuant to section 3-107 of the Administrative Review Law (Ill.Rev.Stat.1985, ch. 110, par. 3-107). The Board and the Department have been given leave to adopt the briefs of CMS on this appeal, which has been expedited on motion of CMS.

Appellants contend on appeal that: (1) the Condell appellants' complaint was not premature and sought review of a final decision of the Board; (2) if the Condell complaint was in fact premature, then the complaint filed by the Highland Park appellants, after a later decision of the Board, was neither premature nor tardily filed; (3) the Highland Park complaint's failure to specify the later decision as the one of which that complaint sought review was not a proper ground for dismissal; (4) appellants adequately exhausted their administrative remedies; and (5) appellants, as parties adversely affected by a final decision of the Board, had statutory standing to seek judicial review and were not deprived of that standing by any failure to participate in administrative proceedings or any acquiescence in a final administrative decision.

At the time appellants filed their reply brief, the Highland Park appellants applied under Supreme Court Rule 362 (107 Ill.2d R. 362) for leave of this court to amend their complaint, and thereafter CMS filed objections to the application. The application was taken with the case.

I. FACTS

A detailed review of the facts ² is necessary in order to convey the extent and origins of the procedural quagmire into which the parties have led themselves. Ambiguity in statutes, rules, and administrative actions is partly responsible for the confusion, but sheer procedural irregularity as well as procedural skirmishing by the parties may well be a factor.

a. Administrative proceedings

(1) Application for CON

In August 1984, Chicago Medical School Hospital, Inc., advised the Department of its intention to apply for a permit, termed a certificate of need ("CON"), to construct a hospital in Lake County, Illinois. On November 13, 1984, the Department received an application for a CON, jointly filed by Chicago Medical School Hospital, Inc. ("Humana"), which was described as a Virginia for-profit corporation that is a wholly owned subsidiary of Humana, Inc., and has authority to do business in Illinois, and by the University of Health Sciences/The Chicago Medical School ("the School"), an Illinois not-for-profit corporation. The application was later modified or supplemented many times. The voluminous application document, attachments, and supplements, amounting to some 2,000 pages, were filed pursuant to sections 5 and 6 of the Illinois Health Facilities Planning Act ("the Planning Act"), under which no person shall construct a health care facility (defined as including hospitals) without first obtaining a permit or exemption from the Board. Ill.Rev.Stat.1983, ch. 111 1/2, pars. 1155, 1156.

The application stated that the proposed 224-bed tertiary-care hospital would be the primary teaching hospital for the School and that the latter has not owned, operated, or controlled its own hospital until now and has been refused repeatedly both teaching affiliations and admitting privileges for its faculty members at Lake County-area hospitals. The application also stated that the joint arrangement with Humana would significantly increase the availability of needed medical care for residents of Lake and McHenry counties. The Chicago Medical School is one of three divisions of the University of Health Sciences; it was founded in Chicago in 1912, became part of the University when the latter was established in 1967, and moved with the University to North Chicago in 1974 in conformity with a State plan to regionalize medical schools and to enable the School to serve the area between Chicago and Milwaukee. During several months after filing its initial application, the School engaged in negotiations with other area hospitals to discuss possible affiliations, and CMS supplemented the application with additional information requested by the Board. During this time, the Board was presented in writing with numerous comments from health-care professionals and planners, editorial writers, and elected public officials regarding the proposed CMS permit. The application was deemed complete and the Board's review thereof was initiated on February 8, 1985.

On February 14, 1985, the Health Systems Agency for Kane, Lake and McHenry Counties ("HSA/KLM") issued to affected parties its Notice of Public Hearing regarding CMS's application. HSA/KLM was the health planning organization for the area encompassing the proposed CMS hospital, so recognized by the Board pursuant to sections 8 and 9 of the Planning Act (Ill.Rev.Stat.1983, ch. 111 1/2, pars. 1158, 1159) and authorized by that Act to review CON applications, to hold public hearings in connection therewith, and to certify to the Board its approval or disapproval thereof on the basis of "standards, criteria or plans of need adopted and approved by [HSA/KLM] * * *." (Ill.Rev.Stat.1983, ch. 111 1/2, par. 1158.) In addition, the City of Chicago Health Systems Agency ("Chicago HSA"), which is Chicago's health planning organization, chose to perform its own review as a contiguous organization pursuant to section 8 of the Planning Act (Ill.Rev.Stat.1983, ch. 111 1/2, par. 1158). Meanwhile, public comments, Board and HSA/KLM review of the CMS application, and negotiations for other possible School-hospital affiliations continued.

After an extensive public hearing that was held on April 4 and 8, 1985, and was accompanied by hundreds of exhibits, HSA/KLM staff produced a report on May 15, 1985, finding that most of HSA/KLM's review criteria were not satisfied by the CMS application. HSA/KLM's board of directors then voted on June 13, 1985, to recommend denial of the CMS application. Meanwhile, after its own review, hearings, and staff report, Chicago HSA's governing body voted on May 22, 1985, to recommend disapproval of the CMS application.

The State Board's review of the CMS application continued to January 1986 as a result of additional modifications to the application; HSA/KLM and Chicago HSA were permitted to conduct their own additional reviews during this time. On October 10, 1985, HSA/KLM's board of directors voted 14-8, with one abstention, on re-review to recommend disapproval of the CMS application as then modified, and one director later filed a minority report. On October 28, 1985, HSA/KLM advised the State Board that revisions to the CMS application as of that date were not substantive and that they did not significantly alter previous HSA/KLM negative findings. On November 20, 1985, after further review, Chicago HSA's governing body again voted to recommend disapproval of the CMS application.

On January 10, 1986, the State Board held a public hearing on the CMS application. After its hearing and its review of a negative staff report by the Department, which provides the Board with administrative and staff support pursuant to section 4 of the Planning Act (Ill.Rev.Stat.1985, ch. 111 1/2, par. 1154), the Board then rejected by a 2-9 vote a motion to approve the CMS application. This vote constituted an intent to deny the application. On January 16, 1986, the Board sent a letter to CMS pursuant to section 10 of the Planning Act, advising CMS of the Board's intent to deny and of CMS's opportunity to appear before the Board and present "such information as may be relevant to the approval of a permit * * * or in resistance of a denial of the application." (Ill.Rev.Stat.1985, ch. 111 1/2, par. 1160.) Although Marshall A. Falk, M.D., the dean and executive vice president of the School, had testified extensively at the Board's January 10 hearing, CMS responded on January 21, 1986, to the Board's letter of intent to deny by asking to appear, and on February 3, 1986, CMS sent additional information to the Board regarding its application. The Board began reviewing the additional material on February 4,...