Mercy Health Center, a Div. of Sisters of Mercy Health Corp. v. State Health Facilities Council, 84-292
| Decision Date | 16 January 1985 |
| Docket Number | No. 84-292,84-292 |
| Citation | 360 N.W.2d 808 |
| Parties | MERCY HEALTH CENTER, A DIVISION OF SISTERS OF MERCY HEALTH CORPORATION, Appellee, v. STATE HEALTH FACILITIES COUNCIL, Appellant, and Tri-State Convalescent Center, Inc., d/b/a Americana Health Care Center of Dubuque, Iowa, Intervenor-Appellant. |
| Court | Iowa Supreme Court |
Thomas J. Miller, Atty. Gen., Jeanine M. Freeman and Maureen McGuire, Asst. Attys. Gen., for appellant state health facilities council.
Edwin N. McIntosh and Lucy J. Gamon of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, for intervenor-appellant.
Alfred E. Hughes of Hughes, Trannel & Jacobs, Dubuque, and Honigman, Miller, Schwartz & Cohn, Detroit, Mich., for appellee.
Considered by UHLENHOPP, P.J., and HARRIS, McCORMICK, McGIVERIN, and SCHULTZ, JJ.
This case turns on the cardinal rule of administrative law: judgment calls are the province of the administrative tribunal and not of the courts. There is obviously much to be said for the plan proposed by the petitioner but it must be sold to the administrative agency. We reverse a district court decision which overturned the administrative determination.
Petitioner Mercy Health Center (Mercy) is a non-profit health care organization which owns two facilities in Dubuque, St. Joseph's and Xavier. The two hospitals were formerly separately owned and each functioned as an independent acute care facility. The Xavier facility is licensed as a 132-bed acute care hospital which, due to lack of demand, has not offered acute care since June of 1982.
It seemed to Mercy's management that much better use could be made of the Xavier facility. A plan was developed to convert it into an elderly care unit. It was proposed to spend three and one-half million dollars on the project. It was no impromptu scheme. According to Mercy's application for certificate of need:
The facilities and services of the Xavier Park will include rehabilitative therapies of occupational therapy, physical therapy, speech and recreation, a sheltered work center, exercise facilities, meal service, day care, day hospital, crafts and group activities, respite and hospice. In addition, it will house a mini-mall area of shops, banks, beauty shops, and other merchants. Offices for various community service agencies will be provided at Xavier Park. There will also be offices designated for ophthalmology, podiatry, mental health, hearing, dental, legal and social services.
The Xavier Park proposal includes provision for 35 skilled nursing beds which will accommodate skilled nursing, respite, hospice, and sheltered care services. Respite is a program of short-term care for impaired elders. It is provided so that relatives who are primary care givers may take vacations or tend to other business. Hospice is a program of health care which coordinates physical, psychological, and spiritual services for the terminally ill and their families. In addition, the facility will provide residential housing for approximately 64 individuals. Twenty-four hour nurse coverage in the skilled nursing facility will also be available for the other residents in the event of an emergency. This is one instance of the cost effective sharing of services between residents of the center and the skilled nursing facility. The Xavier center will also house an urgicenter, which is a walk-in medical facility, open 12-14 hours per day for individuals with non-emergency conditions.
According to Mercy:
The Xavier Park project would convert an existing viable structure, now under-utilized as an acute-care hospital, into a valuable community asset, for renovation costs of less than $3.5 million, or approximately $32 per square foot. A local architect ... has described the existing 1949 structure as 'one of the few hospital buildings that are providing very economical renovation'. This is in contrast to building costs for a new structure of $50 per square foot and higher per square foot costs for comparable renovations.
The only opposition to the project was voiced by the intervenor Tri-State Convalescent Center Inc. (Americana), a for profit organization which operates Americana Health Care Center of Dubuque, a 92-bed facility. Americana is the only local current provider of the sort of care locally that would be offered by Xavier Park. Only 32 Americana beds are available for Medicare reimbursement and it provides no services for indigents. At the time of final submission in district court Americana was 100% occupied and had a waiting list. Dubuque County's population is slightly less than 100,000 and includes a high percentage of elderly citizens.
In order to proceed with the project the petitioner applied with the Iowa health care facilities council for the certificate of need required under Iowa Code section 135.63. A hearing was held after which the council entered the first of what were to be three denials. It determined there was an oversupply of beds in Dubuque and that, under the proposal, health care dollars would subsidize non-health care services which could be provided by non-health care industries.
A rehearing was sought and held. It resulted in another denial. Mercy appealed to the commissioner of public health; he felt the certificate should be granted. Strangely, however, the commissioner has been given no statutory authority to reverse the council. Under section 135.70 the commissioner can merely request the council to reconsider its decision and this he did. It was to no avail because the council persisted in its denial.
Thereafter Mercy appealed to district court under Code section 17A.19. The district court reversed the denial. Two grounds were stated. It was determined that the council " failed to properly apply existing statutory criteria to [Mercy's] application, and factually applied one or more additional standards or criteria that [do not] exist under the statute or administrative rules." This appeal followed. We decided another aspect of the same controversy in Mercy Health Care Center v. Iowa State Department of Health, 356 N.W.2d 200 (Iowa 1984).
I. Initially, we point out that we do not believe the peculiarly limited authority given to the commission under section 135.70 changes the scope of review for either the district court or for us. This is the unique provision which gives an administrative superior the right of review but authority only to recommend reconsideration. It is nevertheless...
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