An ongoing lawsuit in Cole County Court is challenging the ruling and the rule that authorized Patients First's three-bed hospital in Washington.

The Missouri Health Facilities Review Committee is in charge of the state's Certificate of Need program, which approves applications for hospitals and equipment that is over $1 million. In September 2010, that committee voted 4-3 to exempt Patients First from going through with the Certificate of Need 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.

St. John's Mercy Health System was one of the opponents of the proposal, questioning whether the proposal actually cost under $1 million. If it did, then they argued a CON review would show there wasn't a need to build the facility.

In March, St. John's sued the committee in Cole County Circuit Court. In a 28-page filing prepared by several attorneys for Thompson Coburn, St. John's seeks "a judgment that two administrative rules are invalid and seeks judicial review of a MHFRC decision that deprived St. John's of its personal rights under Missouri's Certificate of Need Law."

The first part of the lawsuit is an appeal to the MHFRC determination for not holding a CON hearing. It states that "a reasonable evaluation of even part of the proposed new hospital substantially exceeds $1 million."

Among other things, the lawsuit states there is nothing that gives the MHFRC authority to provide advisory or binding opinions on whether the CON Law does or does not apply to a particular substantive project. It also argues that the exception that allowed Patients First to preclude itself from a CON review is flawed.

Freely Expand

"If an unneeded new hospital can be built for less than $1 million, then there is no constraint on unneeded hospitals," the lawsuit states. "Every person seeking to build an unneeded new hospital could simply build a facility so small that it costs less than $1 million. Then, once the hospital is established, freely expand the hospital without ever establishing the need for the hospital under the CON Law.

"The Legislature did not intend to create a loophole that would allow anyone to establish a hospital that is completely unneeded in the community," the lawsuit adds. "Such a result is arbitrary and capricious and would create inequity and burden on the communities afflicted with unneeded health care facilities and the accompanying increase in the local cost of health care."

The Missouri Attorney General's office - which is defending the MHFRC - stated in a filing that the challenges to the commission's rules should be heard in an appeal of a similar case in St. Louis County Circuit Court. St. John's sued in that venue in 2010 before 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."

The filing also stated "competitors," such as St. John's, do not have standing to challenge a MHFRC decision regarding CON review.

"St. John's third argument is a challenge to the MHFRC's determination that the Patients First project could be completed for under $1 million - it is couched in an assumption that CON review was required when the MHFRC determined expressly that CON review was not required," the brief stated. "In other words, it is a challenge to the factual determination by the MHFRC. A competitor does not have standing to make such a challenge.

"Competitors do not have a protected right in unfettered competition," the brief added. "And it is only where the legislator has deemed to convey such rights that a court will find them, as such rights are not protected by the Missouri or U.S. Constitution . . . Where, as here, St. John's challenge to the MHFRC decision requires the trial court to delve into the facts underlying the dispute as to whether Patient First's proposed project could be completed for under $1 million (and what constitutes ‘a capital expenditure,' etc.), the cause of action is indistinguishable from an appeal from a MHFRC decision of nonapplicability."

Jonathan Dalton, an attorney for Lewis Rice Figersh who represents Patients First, said that the company had filed a motion to intervene in the Cole County case. That motion, he said, had not been ruled on by the court.

"We consider this to be St. John's effort for a legal do over," Dalton said in a telephone interview. "That's not how I have understood the law to be in the state of Missouri. And it's certainly how I have witnessed courts considering our laws. St. John's apparently has a different view."

According to CaseNet, there is a counsel hearing set for Aug. 26. The St. Louis County case is pending in the Missouri Court of Appeals, Eastern District.

Meanwhile, the Certificate of Need program is going through a state of transition. Jacqueline La pine, a spokeswoman for the Department of Health and Senior Services, said there is an ongoing search to find a new Certificate of Need coordinator. The previous coordinator, Tom Piper, retired in early January, La pine said.

"The Certificate of Need program coordinator serves as the principal assistant to the MHFRC and is a state employee," Lapine said in an e-mail. "The director of the Division of Regulation and Licensure is the appointing authority.  We are currently reviewing resumes and interviewing candidates."

The Committee

The committee itself is compromised of two state representatives, two senators and five members of the public. The lawmaker representatives must be equally split between the two parties, while there cannot be more than three members of a certain party among the lay members.

As of press time, the committee had a vacancy among its non-lawmaker members. And three other members - Edna Talboy, James Tellatin and Marty Vollmar - were serving even though their terms had expired.

Scott Holste, a spokesman for Gov. Jay Nixon, said there isn't a worry about the committee not functioning properly.

"While there isn't a timetable for appointments or reappointments, the process on this board is moving forward," Holste said in an e-mail. "As discussed, earlier, the board is able to fully operate with the number of current members, so not having a quorum is not a concern."