The Missouri Supreme Court heard arguments this week on the ongoing dispute between Mercy Hospitals East Communities and Patients First over a three-bed facility in Washington.

It’s not known when the high court will issue a ruling in the case.

The skirmish between the two entities involves the state’s Certificate of Need program, which approves applications for hospitals and equipment that is over $1 million. In September 2010, the Missouri Health Facilities Review Committee voted 4-3 to exempt Patients First from going through with the CON process to build a three-bed hospital in Washington.

The committee decided that since the facility was under $1 million, it didn’t need to go through with the CON process. Mercy eventually sued in St. Louis County Circuit Court before the MHFRC made a decision.

St. Louis County Circuit Court Judge Richard Bresnahan dismissed the case without prejudice because it was “not ripe for judicial determination.” And while Missouri Court of Appeals Eastern District ultimately decided the case was ready for review, it then ruled “that the New Hospital Rule is consistent with the CON Law and the MHFRC was within its authority to promulgate the rule.”

At the heart of Thursday’s proceedings was the interpretation of a state statute listing the definition for a “new institutional health service.” According to state statutes, any person “who proposes to develop or offer a new institutional health service within the state must obtain a certificate of need from the committee prior to the time such services are offered.”

Another state statute lists seven points that defines “new institutional health service.” Dudley Von Holt, an attorney for Thompson Coburn representing Mercy, said a new institutional health service has to meet all the requirements of the seven-point definition.

It would be “illogical,” he said, that a facility would be exempt from CON review if it didn’t meet the first part of the definition, which states that a “new institutional health service” includes “development of a new health care facility costing in excess of” $1 million.

“If you read through them and you see something that doesn’t trigger one that it therefore wouldn’t trigger all – that would be kind of an illogical result,” Von Holt said. “For example, subpart d says ‘pre-development expenses in excess of $150,000.’ Well, we could always come up with a project and have pre-development expenses less than $150,000. If that always meant that you didn’t need a certificate of need, then you’d never need a certificate of need. It would never apply. Because you could always manipulate any given project so that it had pre-development expenses less than $150,000.”

Kevin Hall – an assistant attorney general representing the MHFRC – stated in his brief that the rule and the statutes aren’t in conflict with each other. And Richard Walsh, an attorney for Lewis, Rice & Fingersh who represents Patients First, told the court some of the aspects of the definition couldn’t possibly apply to new hospitals.

For example, one part of the definition states that a “new institutional health service” includes “any change in licensed bed capacity of a health care facility which increases the total number of beds by more than 10 or more than 10 percent of total bed capacity, whichever is less, over a two-year period.”

“We don’t have 10 beds, so we don’t qualify,” Walsh said. “And we don’t have a 10 percent increase. It’s mathematically impossible for you to have a 10 percent increase when your base number is zero. Anybody Googling that could find that out.”

“Can’t have a 10 percent increase if it doesn’t exist,” Chief Justice Richard Teitelman said, responding to Walsh’s point.

In addition to the case before the Supreme Court, Mercy also sued the committee in Cole County Circuit Court. According to, that case is still pending and has a counsel status meeting scheduled for March.