Summit Villa Care Ctr. v. Dept. of Health

Citations: 612 N.E.2d 377; 81 Ohio App. 3d 761; 1992 Ohio App. LEXIS 3761Docket: No. 92AP-84.

Court: Ohio Court of Appeals; July 14, 1992; Ohio; State Appellate Court

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Summit Villa Care Center, Inc. appeals the Certificate of Need Review Board's (CONRB) denial of its application to relocate thirty long-term-care beds from Rafferty's Nursing Home in Clinton, Ohio, to a proposed facility in Tallmadge, Ohio. The appeal raises three assignments of error: 

1. Alleged error by the Ohio Department of Health in denying the Certificate of Need (CON).
2. Claim that Rafferty's Nursing Home was incorrectly determined not to be an existing health care facility.
3. Argument for estoppel against the Department of Health regarding the status of Rafferty's.

On September 12, 1990, Summit Villa applied to expand its nursing home capacity from fifty to eighty beds by acquiring rights to the thirty beds at Rafferty's. The application was denied on March 7, 1991, based on two grounds: Rafferty's did not qualify as an existing health care facility, and there was no demonstrated need for additional long-term-care beds in Summit County. 

During an evidentiary hearing by the CONRB, the hearing examiner upheld the denial, concluding that Rafferty's, despite being licensed, did not meet the criteria of an existing health care facility under Ohio Adm. Code 3701-12-232(E). The hearing examiner also found no grounds for estoppel and determined that the need for additional beds was not substantiated. The CONRB accepted the hearing examiner's recommendation and denied the application on December 19, 1991. 

The key issue centers on whether Rafferty's qualifies as an "existing health care facility" as defined in Ohio administrative law, which requires that a facility be licensed, staffed, and actively providing health care services or have not ceased such services for more than twelve months.

Appellant acknowledges that Rafferty's last patient day was September 14, 1989, and that no health care services have been provided since. Although appellant filed its application within a year of this date, Ohio Adm. Code 3701-12-232(E) stipulates that the director cannot approve applications if the transferring facility is not an existing health care facility at the decision time. The director denied the application on March 7, 1991, and it is undisputed that Rafferty's had not provided health care services for twelve consecutive months prior to this decision, disqualifying it as an existing facility. Appellant did not challenge the validity of the relevant administrative rules or claim that the director delayed the application review, having filed it only two days before the twelve-month period ended. 

Appellant contends that Rafferty's was an existing health care facility due to its continuous license renewal and current status. However, this argument lacks merit, as no statute or rule supports licensure as a determinant of existing facility status. According to Ohio Adm. Code 3701-12-01(F), an existing health care facility must be licensed, staffed, equipped, and actively providing services or have not done so for less than twelve consecutive months. Rafferty's does not meet these criteria, thus appellant's second assignment of error is rejected. 

Appellant's third assignment raises the issue of whether the state should be estopped from denying Rafferty's status as an existing facility. The argument relies on statements from state personnel confirming the facility's license and Medicaid eligibility and on the state’s own documentation listing Rafferty's as an existing facility. However, equitable estoppel generally does not apply against the state in its governmental functions, and even if it did, the facts presented do not establish that Rafferty's was an existing health care facility under the applicable rule. Statements made in 1990 regarding licensure and Medicaid eligibility do not fulfill the criteria for existing status, and there is no evidence of false representation by state employees regarding compliance with the regulatory requirements.

Appellee prepared inventories that included Rafferty's facility and beds for Summit County, with evidence presented from long-term-care inventories from September 1989 to May 1991, as well as a 1991 publication on bed needs. These documents listed Rafferty's as an 'Existing Facility' with its beds counted in the totals. However, the hearing examiner determined these inventories, partly based on outdated documents, were not relied upon by appellant for the Certificate of Need (CON) application. Renacci, a CPA involved in CON applications, testified he typically reviewed annual inventories but did not rely on the specific documents in question when deciding to apply for a CON. He believed licensed and Medicaid-eligible facilities qualified for relocation, indicating a lack of reliance on the 1991 bed excess figures, which were considered nonprejudicial to the CON application process.

The court emphasized that an essential component of any estoppel claim is reliance, which was absent in this case. Despite potential miscalculations in the inventories, these did not affect the overall conclusion regarding the need for proposed beds. The hearing examiner found an excess of 359 beds in Summit County and excluded Rafferty's 30 beds, resulting in a remaining excess of 329 beds. Ohio Adm. Code 3701-12-23(D) establishes a presumption against the need for additional beds in counties with such surpluses. Testimony indicated that Summit County's bed utilization rates were among the lowest in the state, falling short of the required occupancy rate, further supporting the conclusion that there was no need for the proposed beds.

Appellant's evidence of need for additional long-term beds in Summit County relied solely on testimony from Renacci, who indicated a high utilization of his nursing homes and referenced a newspaper article about the increasing senior population in the area. However, the hearing examiner found Renacci's testimony to be brief and general, attributing little weight to it, and discredited the newspaper article as hearsay. Consequently, the examiner concluded that there was insufficient specific evidence to support Renacci's claims. The court upheld the administrative agency's decision, determining that the appellant did not provide persuasive evidence to counter the presumption outlined in Ohio Adm. Code 3701-12-23(D). As a result, the appellant's assignments of error were overruled, and the decision of the CONRB was affirmed. Judges Whiteside and Reilly concurred, with Judge Archer E. Reilly, retired, participating as assigned.