In the Matter of Healthco Facilities, Inc., Karnes/lambcke Convalescent Care Center v. (ohio Department of Health, Formerly the State Health Planning and Development Agency, 89-LW-1799

• Decision Date: 08 June 1989
• Docket Number: 88AP-675,89-LW-1799,88AP-672
• Parties: In the Matter of HEALTHCO FACILITIES, INC., Karnes/Lambcke Convalescent Care Center, Appellee-Appellee, v. (OHIO DEPARTMENT OF HEALTH, formerly the State Health Planning and Development Agency, Appellee-Appellant). In the Matter of HEALTHCO FACILITIES, INC., Karnes/Lambcke Convalescent Care Center, Appellee-Appellant, v. (OHIO DEPARTMENT OF HEALTH, formerly the State Health Planning and Development Agency, Appellee-Appellee).
• Court: Ohio Court of Appeals

In the Matter of HEALTHCO FACILITIES, INC Karnes/Lambcke Convalescent Care Center Appellee-Appellee, v. (OHIO DEPARTMENT OF HEALTH, formerly the State Health Planning and Development Agency Appellee-Appellant). In the Matter of HEALTHCO FACILITIES, INC Karnes/Lambcke Convalescent Care Center, Appellee-Appellant, v. (OHIO DEPARTMENT OF HEALTH, formerly the State Health Planning and Development Agency, Appellee-Appellee).

No. 88AP-672, 88AP-675.

89-LW-1799 (10th)

Court of Appeals of Ohio, Tenth District, Franklin.

June 8, 1989

Appeals from the Franklin County Court of Common Pleas.

Peelle, Rose & Dobyns Co., L.P.A., and William E. Peelle, for appellant (appellee) Healthco Facilities, Inc.

Anthony J. Celebrezze, Jr., Attorney General, and Lawrence D. Pratt, for appellant (appellee) Ohio Department of Health.

Geoffrey E. Webster, for appellee Wilmington Health Care Center, Inc.

OPINION

REILLY Judge.

These are appeals from a judgment of the Franklin County Court of Common Pleas, which reversed a September 30, 1987 order of the State Certificate of Need Review Board ("board") dismissing the appeal of appellee herein Wilmington Health Care Center, Inc. ("Wilmington"), in an action styled as In the Matter of: Karnes/Lambcke Convalescent Care Center.

On May 20, 1986, the board dismissed the appeal of Wilmington from the April 25, 1986 decision of the State Health Planning and Development Agency, now known as the Ohio Department of Health ("ODH"), an appellant herein.

Appellant Healthco Facilities, Inc. ("Healthco"), until April 1986, was the licensed operator of two nursing homes in Clinton County: Autumn Years Nursing Home and Eden Manor. There were eighty-one long-term care beds at the homes. In 1982, Healthco became involved in litigation with the owners of the facilities. In July 1985, Healthco filed an application for a Certificate of Need ("CON") for the construction of a new one-hundred bed long-term care facility authorizing the relocation of the eighty-one long-term care beds in conjunction with the proposed construction of nineteen rest home beds. The new facility was to be named Karnes/Lambcke Convalescent Care Center.

ODH requested that Healthco amend its request to fifty long-term care beds and retain the balance of beds up to fifty as rest home beds. The CON was granted conditionally with financial information to follow authorizing construction of a one-hundred bed facility with fifty long-term care beds and up to fifty rest home beds.

Wilmington filed a notice of appeal with the board from the order granting the CON.

R.C. 3702.58 provides in relevant part:

"(A) Any affected person shall be entitled to an adjudication hearing before the certificate of need review board on a decision of the director of health to grant, deny, or withdraw a certificate of need or a ruling by the director that a proposed project is or is not a reviewable activity. Upon requesting such hearing an affected person shall pay a hearing fee of one hundred dollars to the board. The request for a hearing shall be filed in writing with the board within thirty days after the decision or ruling of the director is mailed. The written request for a hearing shall state the assignments of error on which the request is based. When the request for a hearing is filed, the board shall immediately set the date, time, and place for a pre-hearing conference and forthwith notify the person who filed the request. The conference shall be held within thirty days after the request is filed. Any affected person may present evidence at the conference. The adjudication hearing shall be held within forty-five days after the conclusion of the conference and shall be conducted by a hearing examiner appointed in accordance with Chapter 119 of the Revised Code. The party requesting the hearing shall present its case first and shall have the burden of proof. * * * " (Repealed effective 7-1-89.)

Ohio Adm.Code 3702-2-03 further provides:

"(B) In order to request a hearing, an affected person or his attorney, if any, must make a written request for hearing, to be received by the board within thirty days of the date of mailing of SHPDA's decision in respect to granting, denying, or withdrawing a certificate of need, or granting or denying an exemption, or denying a request for reconsideration, or regarding the appropriateness of an existing institutional or home health service.

"(1) Pursuant to section 3702.58 of the Revised Code, a hearing fee of one hundred dollars must accompany such request, except where the requestor is the state as defined in paragraph (Z) of rule 3702-2-01 of the Administrative Code.

"(2) Such request shall include a statement of the case to indicate the nature of the case, the course of proceedings and its disposition under the SHPDA, a statement of the facts relevant to the assignments of error presented for review with appropriate references to the record.

"(3) The request may also include an argument containing the contentions of the affected person with respect to the assignments of error presented and the reasons therefor, with citations of the authority, statutes, and parts of the record relied upon.

"(4) The SHPDA or any other affected person may file a reply brief with the board prior to the hearing date."

Wilmington's request for a hearing stated in pertinent part:

"There is no record made to date; thus, there can be no reference to the record. For assignments of error it is the Appellant's [Wilmington's] contention that the Certificate of Need issued fails to meet the mandatory requirements of Ohio Administrative Code ] 3701-12-18(A), (D). Further, the SHPDA failed to adhere to and follow the required standards of OAC Rule 3701-12-20(A), and 3701-12-23. Facts relevant to the issue to be presented to the Board will be developed following the exercise of discovery."

In its pre-hearing statement filed on August 26, 1986, ODH requested that Wilmington provide the precise nature of the issues presented for review after Wilmington specified the following in its prehearing statement, filed August 4, 1986:

"3.Issues:

"A.Does the Certificate of Need granted April 25, 1986, meet the provisions of state and federal law governing the Certificate of Need Program, including, without limitation, OAC ]] 3701-12-18, 3701-12-20, 3701-12-23.

"B.Appellant reserves the right to supplement this list as discovery reveals necessary."

Thereafter, ODH again requested Wilmington to more specifically delineate the issues raised at a pre-hearing conference held on February 4, 1987. Wilmington filed a supplemental statement of issues, a witness list and exhibits on March 3, 1987, in which it included the following supplemental statement of issues:

"The Certificate of Need as granted is in violation of the provisions of:

"(a) 42 USC ] 300m-6(2), (4);

"(b) 42 USC ] 300n-1(C);

"(c) ORC ] 3702.52;

"(d) ORC ] 3702.53;

"(e) ORC ] 3702.54;

"(f) ORC ] 3702.55;

"(g) OAC Rule 3701-12-08;

"(h) OAC Rule 3701-12-13;

"(i) OAC Rule 3701-12-14;

"(j) OAC Rule 3701-12-16;

"(k) OAC Rule 3701-12-18;

"(l) OAC Rule 3701-12-20; and

"(m) OAC Rule 3701-12-23."

Both ODH and Healthco filed motions requesting the board to require Wilmington to be more specific, to limit the issues which could be raised, or dismiss the appeal. Wilmington filed a reply to the motions with the board and refused to supply any further motions, stating:

" * * * Wilmington has provided SHPDA with sufficient notice of its basis for appeal through its Notice of Appeal, Pre-Hearing Statement and Supplemental Pre-Hearing Statement. * * * "

On the day of the hearing, the hearing examiner denied the above-mentioned motions. In opening remarks, counsel for Wilmington stated as a basis of the appeal that " * * * there has to date not been a determination of the maximum capital expenditure which is to be authorized * * * "; that the fifty-bed CON " * * * exceeds the bed need as determined by the SHPDA's formula under Ohio Adm.Code 3701-12-23, the special review criterion for long term care facilities. And, in fact, the record will show that there is no need for the additional beds to be offered by this proposed project * * * "; and that " * * * at no time has SHPDA complied with the mandatory requirement for investigating the licensure and certification status of the applicant, which is a condition precedent to the issuance of a certificate of need." ODH and Healthco objected to the delay of these disclosures. The objections were overruled.

On July 15, 1987, the hearing examiner issued a report and recommendation that the "Karnes/Lambcke" CON be denied. Objections were filed to the report which were considered by the board on September 23, 1987. The board rejected the hearing examiner's report and issued an order on September 30, 1987 stating that:

" * * * [T]he mere recitation of a rule or statutory violation is insufficient; there was [sic ] stated with specificity how SHPDA committed error. No where did the Appellant [Wilmington] ever set forth his [sic ] errors on appeal."

Subsequently, Wilmington filed a notice of appeal to the Franklin County Court of Common Pleas pursuant to R.C. 119.12 and R.C. 3702.258. The court rendered its decision reversing the board on the basis that " * * * to the extent that O.A.C. Rule 3702-2-03(B) enlarges the requirements of section 3702.58, it is an unconstitutional exercise of legislative authority." The court also found that Wilmington's request for a hearing sufficiently stated the assignments of error.

Both ODH and Healthco have appealed. ODH advances the following assignments of error:

"I.The lower court erred in finding that appellant-appellee Wilmington Health Care Center stated its...