Ahmad v. Illinois Health Facilities & Services Review Board

Citation: 2013 IL App (5th) 120004Docket: 5-12-0004

Court: Appellate Court of Illinois; September 26, 2013; Illinois; State Appellate Court

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Plaintiffs Maqbool Ahmad and Marion Eye Centers, Ltd. appealed the dismissal of their complaint for judicial review regarding the Illinois Health Facilities and Services Review Board's approval of Cirurgia Centro, LLC's purchase of a controlling interest in a surgical center in Marion, Illinois. The plaintiffs, who held a 30% interest in the center and performed most of its eye surgeries, argued they had standing based on a "letter of intent" to acquire the controlling interest prior to the competitor's approval. However, the court found that the plaintiffs did not operate a competing health care facility, which was necessary to establish standing under Section 11 of the Illinois Health Facilities Planning Act. Consequently, the circuit court's decision to dismiss the complaint was affirmed. The case was presided over by Judge Brad K. Bleyer in Williamson County, with the appellate court's opinion delivered by Justice Chapman, supported by Justices Spomer and Wexstten.

The Surgical Center of Southern Illinois, an Illinois-licensed ambulatory surgical treatment center in Marion, was primarily owned by Surgical Care Affiliates, LLC, with Dr. Maqbool Ahmad holding a 30% stake. Most surgeries by Dr. Ahmad’s practice, Marion Eye Centers, occurred at this center. Both Dr. Ahmad and attorney Ronald Osman sought to acquire the controlling interest from Surgical Care Affiliates, with Ahmad initiating a letter of intent on December 2, 2010, and Osman entering a contingent contract on January 27, 2011, subject to approval from the Illinois Health Facilities and Services Review Board. Cirurgia, owned by Osman, filed for an exemption regarding the change of ownership, leading to a public hearing on April 5, 2011. The Board approved Cirurgia's exemption request on June 28, 2011, despite Dr. Ahmad's objections, and the purchase was finalized shortly thereafter. Dr. Ahmad and Marion Eye Centers filed a complaint seeking judicial review on August 1, 2011, to reverse or remand the Board's decision, but their case was dismissed on November 17, 2011, due to lack of standing as they were not considered “adversely affected persons.” Their request for reconsideration was denied on December 19, 2011, prompting an appeal regarding the trial court's dismissal under section 2-619 of the Code of Civil Procedure, which reviews whether a genuine issue of material fact existed to justify the dismissal or if it was lawful. The appellate review is conducted de novo.

A proposed change in ownership of an Illinois-licensed health care facility requires the buyer to submit an application for exemption to the Illinois Health Facilities and Services Review Board (HFPB), along with a processing fee, and to receive HFPB approval. If the change only involves ownership, a permit is not necessary; instead, a certificate is issued. The process for obtaining this certificate is streamlined, with no right to rehearing on the Board’s decision, and approval is mandatory if the application is properly completed. The Department of Public Health reviews the application for completeness and is responsible for publishing legal notices of the exemption certificate request.

In this case, Cirurgia followed the required procedures before acquiring the surgical clinic. A public hearing was requested and held on April 5, 2011, during which plaintiffs expressed their views. Following the hearing, the Board chairman must make a decision on the exemption request within 60 days, either approving it or referring it to the Board for further action. An administrative hearing is only available if the exemption application is denied. 

The key legal issue at hand is whether an “interested person” who participated in the public hearing has the right to seek judicial review of the Board's approval of the exemption certificate. The plaintiffs argue they qualify as "adversely affected" under regulatory definitions, which grants them the right to pursue this review.

The agency established categories of "adversely affected" persons to restrict participation in administrative hearings following Planning Board application denials. Only those identified as intervenors, who fit the definition of "adversely affected" persons, are entitled to participate in Board proceedings and appeal decisions. The relevant regulation lists nine categories, and plaintiffs assert they qualify under two: those residing within the geographic area served by the applicant and those who regularly use healthcare facilities in that area. However, the regulation specifies that the definition applies solely to parties in Health Facilities Planning Board proceedings, not to judicial reviews. The defendants argue that the plaintiffs lack standing for judicial review since the order in question is not a final order. While the plaintiffs are found to lack standing, the basis for defendants' claim is disputed. Previous cases, such as *Manor Healthcare Corp. v. Northwest Community Hospital*, established that operators of competing healthcare facilities can have standing to seek judicial review of decisions granting permits, as they are adversely affected by new competitors. Similarly, in *Condell Hospital v. Health Facilities Planning Board*, competing hospitals were recognized as having standing due to the adverse effects of the Board's decisions on their operations.

Manor Healthcare Corp. and Condell Hospital cases are not applicable to the current situation due to their focus on certificates of need instead of certificates of exemption, and the timing of rehearings allowed by the administrative agency prior to May 1, 1990. After that date, the Health Facilities Planning Board's ability to reconsider its decisions was repealed and has not been restored, meaning that the approval of a certificate of exemption signifies the conclusion of the administrative process, rendering the order final despite a lack of specific regulation defining it as such.

A relevant case post-1990, Dimensions Medical Center, Ltd. v. Suburban Endoscopy Center, involved hospitals seeking judicial review of the Board's approval for a gastroenterological surgical center. The trial court ruled that the hospitals had standing but was reversed on appeal, where the Board argued the hospitals lacked evidence of performing gastroenterological procedures. The appellate court deemed the regulatory definitions of “adversely affected” inapplicable to judicial review. It clarified that participation in public hearings does not establish standing and confirmed that only those “adversely affected,” defined as competitors in healthcare, may seek judicial review under section 11 of the Illinois Health Facilities Planning Act. This definition is supported by case law without a clear statutory definition in the Act.

Dr. Ahmad and Marion Eye Centers did not present arguments establishing that they are competing health care facilities. Dr. Ahmad maintains a 30% ownership in the surgical center and claims to be adversely affected by several factors: the lack of a medical license for Ronald E. Osman, a breach of the sales agreement for the surgical center to the plaintiffs, the plaintiffs’ residency within the surgical center's geographic area, their regular use of the facility, and their participation in a state agency proceeding. However, many of these claims relate to the definition of "adversely affected" within the administrative context or rely on a now-repealed federal regulation, which are not relevant to this case. The plaintiffs' assertions regarding Osman's medical license, the alleged breach of contract, and their involvement in the administrative hearing do not qualify them as "adversely affected" persons. Since the plaintiffs did not argue that they operate a competing health care facility, they lack standing for judicial review under the Illinois Health Facilities Planning Act. Consequently, the trial court's dismissal of the plaintiffs' complaint for lack of standing is affirmed.