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03/03/95 SPRINGWOOD ASSOCIATES v. HEALTH FACILITIES

March 3, 1995

SPRINGWOOD ASSOCIATES, D/B/A ELMWOOD HEALTH CARE CENTER, PLAINTIFF-APPELLANT,
v.
HEALTH FACILITIES PLANNING BOARD, FIRST CAREAMERICA CORPORATION, CHARLES FOLEY, JOHN LUMPKIN, AND ILLINOIS DEPARTMENT OF PUBLIC HEALTH, DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Sangamon County. No. 93MR341. Honorable Richard J. Cadagin, Judge Presiding.

As Corrected March 31, 1995. Petition for Rehearing Denied and Released for Publication March 31, 1995.

Justices: Honorable Robert W. Cook, J. Honorable Carl A. Lund, J. Honorable Robert J. Steigmann, J. Justice Cook delivered the opinion of the court: Lund and Steigmann, JJ., concur.

The opinion of the court was delivered by: Cook

JUSTICE COOK delivered the opinion of the court:

In November 1993, the Illinois Health Facilities Planning Board (Board) approved the application of defendant First CareAmerica Corporation (First CareAmerica) for a certificate of need to add 28 skilled nursing beds to its Collinsville Care Center, a 122-bed skilled nursing facility located in Collinsville, in Madison County. Plaintiff Springwood Associates Limited Partnership (Springwood), operator of the Elmwood Health Care Center located in Maryville in Madison County, then filed a complaint for administrative review of the Board's decision. The circuit court affirmed, and this appeal followed. We find the Board's decision was arbitrary and capricious and therefore reverse.

On August 27, 1993, First CareAmerica filed its application. On September 20, 1993, pursuant to the Illinois Health Facilities Planning Act (Act) (20 ILCS 3960/1 et seq. (West 1992)), Springwood and Eden Village, which operates a facility in Edwardsville, Illinois, each requested a public hearing on the proposed project. Springwood filed written objections. Objections were also filed by the Lincoln Home, Inc., located in Belleville, Illinois, University Manor, located in Edwardsville, and Eden Village, all arguing the additional beds were not needed because of excess beds available in surrounding counties. Springwood also objected the application did not meet several of the general review criteria.

A public hearing was held October 6, 1993, at which five people offered oral testimony, and five offered written testimony, including the objections listed above which were included in the record of the hearing. In October 1993, the Illinois Department of Public Health (Department) issued a report on the proposed project which found it to be in accordance with the review criteria established under parts 1110 and 1120 of title 77 of the Illinois Administrative Code (Code) (77 Ill. Adm. Code pts. 1110, 1120 (1992-93)). First CareAmerica's application was considered at the October 28, 1993, meeting of the Board, at which time the Board voted to approve the application. The Board adopted the Department's report as its findings.

Persons adversely affected by final decisions of the Board may have such decisions reviewed by the circuit court, pursuant to the provisions of the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 1992)). (20 ILCS 3960/11 (West 1992).) On review, an administrative agency's findings and conclusions of fact are held to be prima facie true and correct. (735 ILCS 5/3-110 (West 1992); Carver v. Bond/Fayette/Effingham Regional Board of School Trustees (1992), 146 Ill. 2d 347, 355, 586 N.E.2d 1273, 1276-77, 167 Ill. Dec. 1; Novosad v. Mitchell (1993), 251 Ill. App. 3d 166, 173, 621 N.E.2d 960, 965, 190 Ill. Dec. 507.) An administrative decision should not be overturned unless the agency exercised its authority in an arbitrary and capricious manner or the decision is contrary to the manifest weight of the evidence. ( Murdy v. Edgar (1984), 103 Ill. 2d 384, 391, 469 N.E.2d 1085, 1088, 83 Ill. Dec. 151; Novosad, 251 Ill. App. 3d at 173, 621 N.E.2d at 965.) The judgment of the circuit court entered in administrative review is reviewable by appeal as other civil cases. 735 ILCS 5/3-112 (West 1992).

The Act establishes a procedure designed to reverse the trends of increasing costs of health care resulting from unnecessary construction or modification of health care facilities. (20 ILCS 3960/2 (West 1992).) The Act created the Board. (20 ILCS 3960/4 (West 1992).) No person may construct, modify, or establish a health care facility without obtaining a permit or exemption from the Board. (20 ILCS 3960/5 (West 1992).) Applications for a permit or exemption are to be made on forms provided by the Board and are to contain such information as the Board deems necessary. Applications are to include affirmative evidence upon which the Board may make its decision approving or denying a permit or exemption. 20 ILCS 3960/6 (West 1992).

The Department has the power, with prior approval of the Board, to prescribe rules, regulations, standards, criteria, procedures, or reviews required to carry out the provisions and purposes of the Act. Such rules and regulations, et cetera, may vary according to the purpose for which a review is conducted, and the type of project being reviewed. (20 ILCS 3960/12(1) (West 1992).) The Department also has the power to develop criteria and standards for health care facilities planning, conduct statewide inventories of health care facilities, and to develop health care facility plans, which upon adoption by the Board are to be utilized in the review of applications for permits under the Act. 20 ILCS 3960/12(4) (West 1992).

The Board is to approve and authorize the issuance of a permit if it finds (1) the applicant is fit, willing, and able to provide a proper standard of health care service for the community with particular regard to the qualification, background, and character of the applicant; (2) economic feasibility is demonstrated; (3) safeguards are provided which assure the proposed project is consistent with the public interest; and (4) the proposed project is consistent with theorderly and economic development of such facilities and is in accord with standards, criteria, or plans of need adopted and approved pursuant to section 6 of the Act. 20 ILCS 3960/6 (West 1992).

The Board argues the application and evidence introduced at the public hearing satisfied all necessary criteria for approval of the application. The Board also contends the deficiencies cited by Springwood would not be fatal to the application in any event, since they focus only on the regulations.

Generally, administrative agencies must follow their own rules as written, without making ad hoc exceptions or departures therefrom in adjudicating. ( Mattoon Community Unit School District No. 2 v. Illinois Educational Labor Relations Board (1990), 193 Ill. App. 3d 875, 881, 550 N.E.2d 610, 614, 140 Ill. Dec. 725.) When an administrative agency has adopted rules and regulations under its statutory authority for carrying out its duties, the agency is bound by those rules and regulations and cannot arbitrarily disregard them. ( Union Electric Co. v. Department of Revenue (1990), 136 Ill. 2d 385, 391, 556 N.E.2d 236, 239, 144 Ill. Dec. 769; Heavner v. Illinois Racing Board (1982), 103 Ill. App. 3d 1020, 1025, 432 N.E.2d 290, 294, 59 Ill. Dec. 706; see also Holland v. Quinn (1978), 67 Ill. App. 3d 571, 574, 385 N.E.2d 92, 94, 24 Ill. Dec. 325; Service v. Dulles (1957), 354 U.S. 363, 1 L. Ed. 2d 1403, 77 S. Ct. 1152.) Therefore, if the Board's approval of First CareAmerica's application was contrary to the duly promulgated regulations, the approval must be reversed.

Springwood argues First CareAmerica failed to provide "market studies of the area indicating the characteristics of the population to be served" by the proposed additional beds as required by the Board's regulations. (77 Ill. Adm. Code ยง 1110.230(a)(1) (1992-93).) First CareAmerica counters that although it did not provide any market studies, it did provide evidence of a market study indicating 95% of its current patients were from Madison County, and a record of inquiries from potential patients which showed 82% of 61 inquiries received during a 12-month period were from Madison County ...


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