Sisters of St. Francis Health v. Morgan County, in
| Decision Date | 02 November 2005 |
| Docket Number | No. 1:05 CV 0623 DFH TAB.,1:05 CV 0623 DFH TAB. |
| Parties | SISTERS OF ST. FRANCIS HEALTH SERVICES, INC., d/b/a St. Francis Hospital Mooresville, Plaintiff, v. MORGAN COUNTY, INDIANA, et al., Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Dave C. Bromund, Gayle A. Reindl, Michael D. Chambers, Steven C. Shockley, Thomas A. Barnard, Sommer Barnard Attorneys, PC, Indianapolis, IN, for Plaintiff.
Joseph C. Chapelle, Kendall H. Millard, Mark Jason Crandley, Barnes & Thornburg LLP, Indianapolis, IN, Edward John Steren, John J. Miles, Ober Kaler Grimes & Shriver, Washington, DC, for Defendants.
Daniel Martin Riess, U.S. Department of Justice, Washington, DC, for Intervenor.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In the past, the State of Indiana required state government approval, in the form of what was often called a certificate of need, before a new hospital could be built or an existing hospital could be substantially expanded. The state repealed that requirement in 1987 and allowed market forces of supply and demand to replace the certificate of need regulatory process. Pub.L. No. 194-1987, § 9, 1987 Ind. Acts 2270 (repealing Ind.Code §§ 16-1-3.7-1 to -12).
The central issue in this case is whether a county government in Indiana may now impose on its own a new requirement for county approval of hospital construction or expansion. Under a federal statute protecting religious freedom, a more specific question is whether such a county requirement may be applied to a hospital operated by a religious order in furtherance of its mission to heal the sick. The case was tried to the court on October 4 and 5, 2005 on an expedited schedule with the agreement of the parties. The court now states its findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure. Substance rather than the court's label shall govern whether a matter is treated as a finding of fact or a conclusion of law. As explained below, the court finds that the new Morgan County ordinance imposing first a limited moratorium and then a county approval requirement on hospital construction in the county is preempted by Indiana's Home Rule Act. The court also finds that the ordinance is not preempted by the federal Sherman Act, does not at least on its face violate plaintiff's rights under the federal Religious Land Use and Institutionalized Persons Act known as RLUIPA, and does not violate Indiana zoning laws.1
The parties in this case operate the only two hospitals in Morgan County, Indiana. Plaintiff Sisters of St. Francis Health Services, Inc. ("St.Francis") operates a hospital in Mooresville. It has brought this action against defendants Morgan County, the county's Board of Commissioners, and the Board of Trustees of Morgan Hospital & Medical Center ("Morgan Hospital"), which operates a hospital in Martinsville. On April 18, 2005, the Commissioners passed Ordinance 4-1-6, titled the "Morgan County Ordinance for Health Facilities Planning and an Equitable Assessment for Uninsured Care" ("the Ordinance"). The Ordinance imposes a limited moratorium on the construction of specified health care equipment and facilities within the county until December 31, 2005. After that date, the Ordinance requires the Commissioners to approve construction of such facilities. The Ordinance took effect immediately upon passage.
When the Ordinance took effect, St. Francis was planning a $40 million expansion project of its hospital in Mooresville. The project has been stalled by passage of the Ordinance with its two-stages of regulation: first the 2005 moratorium, and then the more permanent approval process taking effect on January 1, 2006. The Ordinance provides an exception to the moratorium for applicants who could "demonstrate sufficient need" according to criteria discussed below. St. Francis has not submitted an application for an exception but instead filed this suit. St. Francis alleges that the Ordinance violates the Sherman Antitrust Act, 15 U.S.C. § 1, the federal Religious Land Use and Institutionalized Persons Act ("RLUIPA"), 42 U.S.C. § 2000cc et seq., the Indiana Home Rule Act, Indiana Code § 36-1-3-1 et seq., and Indiana zoning laws.
Morgan Hospital and St. Francis compete with one another in the delivery of health care services in Morgan County, Indiana. Morgan Hospital is an agency of the Morgan County government. Jt. Ex. 1 at 1; Ex. 9. Morgan Hospital was created by the Board of Commissioners of Morgan County, Indiana. Jt. Stip. Fact ¶ 7. Morgan Hospital is operated by its own Board of Trustees, the members of which are appointed by the Board of Commissioners. Id., ¶¶ 8 & 9. The Commissioners guaranteed a loan issued in 2002 to finance a multi-million dollar expansion of Morgan Hospital. Ex. 265. Morgan Hospital provides inpatient, outpatient, and emergency room services. It also provides a range of related health care services that include cancer treatment, orthopedic services, kidney dialysis, cardiac catheterization, emergency room, and laboratory services. Id., ¶¶ 13-16.
Plaintiff Sisters of St. Francis Health Services, Inc. ("St.Francis") is a not-for-profit corporation sponsored and controlled by the Sisters of St. Francis of Perpetual Adoration, a religious congregation of women in the Roman Catholic Church. Jt. Stip. Facts ¶¶ 2 & 3. St. Francis's Hospital-Mooresville is one of three hospital campuses that St. Francis operates in south-central Indiana. Id., ¶ 27. St. Francis does not require its employees to subscribe to the Catholic faith, but it requires that all employees perform their jobs in accordance with the "Ethical and Religious Directives for Catholic Health Care Services." Jt. Ex. 53; Jt. Ex. 67. Employees must also be willing to abide by the mission and values of the Sisters of St. Francis of Perpetual Adoration. Sister Jane Marie Klein, Chairperson for the Board of St. Francis, testified that an important aim of St. Francis Hospital — Mooresville is to carry out what the sponsoring Sisters of St. Francis believe to be their healing ministry.
The Ordinance had its origins in the fall of 2004 when Morgan Hospital officials presented to the County Commissioners a version of the Ordinance that would have imposed a two year moratorium on health care facility construction in the county. Jt. Stip. Fact ¶¶ 18, 19. Tom Laux, CEO of Morgan Hospital, provided the original draft to Pete Foley, counsel for Morgan County. P. Foley Dep. at 16-17. Morgan Hospital representatives publicly presented the early draft of the Ordinance at a meeting of the Board of Commissioners on November 15, 2004. Jt. Stip. Fact ¶ 19; Jt. Ex. 4. Keith Jewell, Executive Director of St. Francis Hospital — Mooresville, spoke against enactment of a moratorium at the meeting. Jt. Ex. 8 at 23-40. After public comment, the Commissioners decided to table the proposal. Jt. Stip. Fact ¶ 19: Jt. Ex. 8 at 55.
In January 2005, Ralph Foley, counsel for Morgan Hospital, wrote to Steven Harris, counsel for St. Francis, addressing the issue of the proposed moratorium. Foley described Morgan Hospital as "a unit of county government" and expressed Morgan Hospital's interest in collaborating with St. Francis to solve the parties' disagreement over enactment of a moratorium. Foley wrote: "For example, we could have a limited moratorium that would benefit both St. Francis and Morgan Hospital, should St. Francis not further duplicate Morgan [Hospital]'s services." Jt. Ex. 9. Writing back on behalf of St. Francis, Harris declined, explaining that since the two hospitals could be considered competitors, such agreements could violate antitrust laws. Jt. Ex. 10.
Attorney Ralph Foley is also a member of the Indiana House of Representatives. During the 2005 session of the General Assembly, he introduced House Bill 1494, which would have permitted a county executive to adopt an ordinance requiring health care facilities to obtain county approval before building a new health care facility. Jt. Ex. 11; Jt. Stip of Fact ¶ 37. The bill was amended and approved by the House Committee on Public Health but died without a vote by the full House of Representatives. Jt. Stip. Fact ¶ 38.
After House Bill 1494 died, Morgan Hospital's effort to prevent St. Francis — Mooresville from expanding then returned to the County Commissioners. At a public meeting on April 18, 2005, the Commissioners again addressed the proposed moratorium. Id. ¶ 17; Jt. Ex. 17. Because the Foley, Foley & Peden law firm represented both Morgan Hospital and Morgan County, the meeting's discussion on the moratorium began with a conflict waiver by the Commissioners. Jt. Ex. 17 at 1-2. Representatives from both Morgan Hospital and St. Francis made presentations at the meeting. See Jt. Ex. 17. In his presentation on behalf of Morgan Hospital, Ralph Foley noted that Morgan Hospital is a branch of the county government, id. at 17, and he spoke specifically about St. Francis in advocating passage of the Ordinance:
[The Ordinance] has exceptions for the existing private specialty hospital. And Morgan Hospital would continue to accept St. Francis because they do fine work. But it keeps duplicating a lot of the same services that Morgan [Hospital] has as a full service hospital.
Id. at 13-14. Foley acknowledged the antitrust implications of direct collaboration between Morgan Hospital and St. Francis:
There is a problem in collaboration. I was asked why don't you work these things out together? Why don't you get together? I think they are correct when they inform me that we cannot collude or violate antitrust laws, but we can all come before the County as a result of an ordinance and make our case clear as to our medical facilities.
Id. at 14. Representatives of St. Francis spoke in opposition to the Ordinance. Id. at 30-49. The Commissioners voted to amend...
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