Twin Ports Convalescent, Inc. v. Minnesota State Bd. of Health

• Decision Date: 05 August 1977
• Docket Number: A-V,No. 46803,46803
• Citation: 257 N.W.2d 343
• Parties: TWIN PORTS CONVALESCENT, INC., et al., Appellants, v. MINNESOTA STATE BOARD OF HEALTH, Respondent, Carl Bergl and Glen Michael, d.b.a. Duluth Med-an Ambulance Service, Respondents.
• Court: Minnesota Supreme Court

Page 343

257 N.W.2d 343

TWIN PORTS CONVALESCENT, INC., et al., Appellants, v. MINNESOTA STATE BOARD OF HEALTH, Respondent Carl Bergl and Glen Michael, d.b.a. Duluth Med-A-Van Ambulance Service, Respondents.

No. 46803.

Supreme Court of Minnesota.

Aug. 5, 1977.

Syllabus by the Court

1. Plaintiffs have standing to maintain this action challenging the validity of a license issued to a competitor whether the test to be applied is one of "injury in fact" or injury in fact plus an interest arguably among those sought to be protected by the statute in question.

2. The operator of an ambulance service who proposes to offer ambulance service in a new area within the state must first demonstrate to the satisfaction of the State Board of Health at a public hearing that the public convenience and necessity require the proposed ambulance service. Minn.St. 144.802.

Fryberger, Buchanan, Smith, Sanford & Frederick and Harold A. Frederick, Duluth, for appellants.

Warren Spannaus, Atty. Gen., John A. Breviu, Sp. Asst. Atty. Gen., Minneapolis, for Minn. St. Bd. of Health.

Hanft, Fride, O'Brien & Harries and Tyrone P. Bujold and John D. Kelly, Duluth, for Bergl and Michael.

Heard before PETERSON, MacLAUGHLIN, and SCOTT, JJ., and considered and decided by the court en banc.

PETERSON, Justice.

Plaintiffs, Twin Ports Convalescent, Inc. and G.C.A.S., Inc., are Minnesota corporations which have operated ambulance services in Duluth, Minnesota, for several years. On June 16, 1975, defendant State Board of Health (board) issued to defendants Carl Bergl and Glen Michael (hereinafter "defendants") a license to operate an ambulance service in Duluth. Plaintiffs seek (1) a declaratory judgment that defendants' license is invalid because no public hearing was held, as required by Minn.St. 144.802, to determine whether the public convenience and necessity require an additional ambulance service in Duluth; and (2) a permanent injunction restraining defendants from operating an ambulance service in Duluth until they demonstrate at a public hearing the requisite public convenience and necessity. The trial court held that defendants' license was validly issued without a public hearing and dismissed plaintiffs' complaint. We reverse.

Resolution of this controversy centers upon the meaning of Minn.St. 144.802, which provides:

"No operator shall operate an ambulance service within this state unless it possesses a valid license to do so issued by the state board of health. The cost of the license shall be in an amount prescribed by the board pursuant to section 144.122. Licenses shall expire and be renewed as prescribed by the board pursuant to section 144.122. The state board of health shall not issue licenses for the operation of newly established ambulance service in the state unless the service meets the standards required by sections 144.801 to 144.806 and the applicant has demonstrated to the satisfaction of the state board of health at a public hearing that the public convenience and necessity require the proposed ambulance service." (Italics supplied.)

The italicized language was added to the statute by amendment in 1973. L.1973, c. 220, § 3. Previously, the only prerequisite to issuance of a license was compliance by the applicant with certain standards embodied in Minn.St. 144.801 to 144.806 and relating primarily to equipment.

The chain of events giving rise to the instant controversy commenced on July 25, 1974, when defendant Bergl, who at that time operated no ambulance service anywhere in the state, applied to the board for a license to operate an emergency and nonemergency ambulance service in Duluth. A public hearing, as required by Minn.St. 144.802, was held in Duluth on September 17, 1974. Because most of Bergl's evidence of "public convenience and necessity" related to nonemergency service, Bergl amended his application during the course of the hearing to delete his request for emergency service authorization. On December 12, 1974, the board adopted the recommended conclusion of the hearing officer that public necessity and convenience did not require an additional nonemergency ambulance service in Duluth. Accordingly, the board denied Bergl's application.

Several months later, in May of 1975, defendants purchased the North Star Ambulance Service owned by Victor Vainovskis and located in Minneapolis. The sale was conditioned upon "transfer" of Vainovskis' license to defendants.

Vainovskis was employed full time as an assistant trainer and equipment manager at Macalester College. For many years during his spare time he had been involved as a volunteer in providing standby ambulance service at special events such as parades and sports contests. His ambulance was not available generally to the public, and his use of it was seasonal; in fact, from November 1974 to April 1975, the ambulance was on blocks in his back yard. At the time of the sale, Vainovskis had a license for emergency service and some weeks previously had arranged to have 24-hour backup service because the statute at that time did not authorize limited services such as that which Vainovskis operated. ¹

Contemporaneous with their purchase of Vainovskis' North Star Ambulance Service, defendants applied to the board for a license to operate the service. On May 21, 1975, the board, without a public hearing issued defendants a license for emergency service. Three weeks later, defendants advised the board by letter that they intended to open a "branch office" to provide ambulance services in Duluth. On June 16, 1975, the board issued defendants a license for emergency and nonemergency services in Duluth in the name of North Star Ambulance Service, d.b.a. Duluth Med-A-Van Ambulance Service. No public hearing was held.

The board maintains that its actions were proper. However, it did not take an active role in the trial court proceedings, nor did it file an appeal brief, in the belief that the other parties have adequately presented the issues to this court. Plaintiffs argue on appeal that defendants' license to operate an ambulance service in Duluth is invalid for either of two reasons: (1) Vainovskis had no "ambulance service" to transfer to defendants and thus their initial license, the basis for the second license, was improperly issued; (2) even if defendants had a valid license to operate Vainovskis' service, that license did not authorize them to operate a service in an area outside the Twin Cities. We find plaintiffs' latter argument persuasive and need not reach their alternative argument.

1. Before reaching the merits, we address defendants' contention that plaintiffs, "whose only interest is in keeping down the number of competitors," have no standing to challenge the validity of a license issued to a competitor. We hold that plaintiffs do have standing to bring this action whether the test to be applied is one of "injury in fact" ² or one of injury in fact plus an interest arguably among those sought to be protected by the statute in question. ³

Injury in fact is shown by plaintiffs' allegations that their Duluth business generated lower profits since the board issued defendants a license and defendants commenced operating an ambulance service in Duluth. Under plaintiffs' interpretation of Minn.St. 144.802, their interest in operating a profitable business is arguably within those sought to be protected by the statute. They assert that Minn.St. 144.802, in recognition of the inelastic demand and fixed costs characteristic of the ambulance service business, was intended to preserve the quality of service offered to the public by protecting existing services from competition in the absence of a showing that an additional service is in fact needed. Defendants argue that the statute exists to insure that ambulance services are properly equipped and operated. This is a question addressed to the merits and not determinative of plaintiffs' standing to litigate that question. See, Assn. of Data Processing Serv. Org. supra ; Chicago v. Atchison, Topeka & Sante Fe R. Co., 357 U.S. 77, 83, 78 S.Ct. 1063, 1067, 2 L.Ed.2d 1174, 1180 (1958). Plaintiffs have shown an interest arguably among those intended to be protected by the statute.

Finally, in support of our holding that plaintiffs have standing to bring this action, we reiterate that the underlying purpose of the doctrine of standing and the various tests which it has spawned is "to guarantee that there is a sufficient case or controversy between the parties so that the issue is properly and competently presented to the court." Minn. State Bd. of Health v. City of Brainerd, Minn., 241 N.W.2d 624, 628 (1976). The tests have served their function well in this case, for plaintiffs have vigorously and competently pursued this action. The board shares this view, as it stated when declining to file an appeal brief.

2. The substantive issue before us in this case is: What is a "newly established ambulance service" for which a license may not be issued under Minn.St. 144.802 in the absence of a public hearing and determination of public convenience and necessity. Plaintiffs argue that "ambulance service" necessarily connotes a particular geographic service area and that the statute requires a public hearing whenever a service operating in one area moves to another as well as whenever a license is sought for a service new to the state. Defendants argue that the hearing requirement applies only to the initial application for service new to the state and that once a license has been granted, the licensee may move freely throughout the...