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Marion Hospital Corp. v. Illinois Health Facilities Planning Board

September 19, 2002

MARION HOSPITAL CORPORATION, APPELLEE,
v.
THE ILLINOIS HEALTH FACILITIES PLANNING BOARD ET AL., APPELLANTS
MARION HOSPITAL CORPORATION, APPELLEE,
v.
SOUTHERN ILLINOIS HOSPITAL SERVICES ET AL., APPELLANTS.



The opinion of the court was delivered by: Chief Justice McMORROW

Docket Nos. 91426, 91479 cons.-Agenda 20-January 2002.

At issue in this appeal is whether the Illinois Health Facilities Planning Board properly granted a permit to defendant Southern Illinois Orthopedic Center, L.L.C., to construct an ambulatory surgical treatment center.

BACKGROUND

Pursuant to the Illinois Health Facilities Planning Act (Planning Act) (20 ILCS 3960/1 et seq. (West 1998)), *fn1 any person wishing to "construct, modify or establish a health care facility" (20 ILCS 3960/5 (West 1998)) must first obtain a permit from the Health Facilities Planning Board (the Board) (see 20 ILCS 3960/3 (West 1998) (establishing the Board)). A permit is to be granted by the Board if it finds:

"(1) that 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) that economic feasibility is demonstrated in terms of effect on the existing and projected operating budget of the applicant and of the health care facility; in terms of the applicant's ability to establish and operate such facility in accordance with licensure regulations promulgated under pertinent state laws; and in terms of the projected impact on the total health care expenditures in the facility and community, (3) that safeguards are provided which assure that the establishment, construction or modification of the health care facility or acquisition of major medical equipment is consistent with the public interest, and (4) that the proposed project is consistent with the orderly and economic development of such facilities and equipment and is in accord with standards, criteria, or plans of need adopted and approved pursuant to the provisions of Section 12 of this Act." 20 ILCS 3960/6 (West 1998).

In accordance with section 12 of the Planning Act, the Board has adopted administrative regulations which contain standards and criteria for it to consider when reviewing permit applications. The pertinent regulations for this case are set forth in parts 1110 and 1120 of title 77 of the Illinois Administrative Code (title 77). 77 Ill. Adm. Code pts. 1110, 1120 (1996).

The Board is aided in the permit application process by the Illinois Department of Public Health (Department). Under section 12.2 of the Planning Act (20 ILCS 3960/12.2 (West 1998)), the Department conducts the initial review of permit applications that are submitted to the Board. The Department makes findings regarding the application's compliance with the criteria established by the Board and submits these findings to the Board. See 20 ILCS 3960/12.2 (West 1998). The ultimate decision regarding the permit application, however, remains with the Board. See 20 ILCS 3960/6 (West 1998).

On November 13, 1998, defendant Southern Illinois Orthopedic Center, L.L.C. (SOIC), filed an application with the Board for a permit to construct a "limited specialty orthopedic ambulatory surgical treatment center" (ASTC) in Herrin, Illinois. SOIC is a joint venture between Southern Illinois Orthopedic Associates, L.L.C. (the Associates), which is comprised of six orthopedic surgeons, and Southern Illinois Hospital Services (SIHS), a not-for-profit corporation that operates several hospitals in southern Illinois. The project which was proposed by SOIC in its application included the construction of a building to house the ASTC and a medical office building to house the office practice of the orthopedic surgeons.

On January 28, 1999, as part of its initial review process, the Department held a public hearing on SOIC's permit application. At that time, the Department accepted 38 written statements and heard oral testimony from 17 witnesses. Only three parties opposed the project. Among them was the plaintiff in this case, Marion Hospital Corporation (Marion). Marion operates Marion Memorial Hospital, an institution located approximately 10 miles from the site of the proposed ASTC.

In a written statement submitted subsequent to the hearing, Marion argued against SOIC's project. Marion claimed that, if the ASTC were constructed, Marion's hours of surgery would be reduced by 1,500 hours per year. Marion also noted that it had an application on file to build a new hospital with a new surgery suite and that SOIC "should work with Marion Memorial to avoid unnecessary duplication of services." Finally, Marion contended that SOIC's application did not satisfy the criteria for the establishment of a new facility that are set forth in section 1110.1540(g) of title 77.

On May 21, 1999, the Board approved SOIC's application and on June 1, 1999, a permit letter was issued to SOIC. On July 6, 1999, Marion, as a party adversely affected by the Board's final decision (see 77 Ill. Adm. Code §1180.40(e) (1996)), sought judicial review in the circuit court of Cook County, as provided for in section 11 of the Planning Act (20 ILCS 3960/11 (West 1998)). Marion's complaint named as defendants SOIC, the Associates and SIHS (collectively SOIC), as well as the Board, its chairperson, Pam Taylor, and the Department (collectively the state defendants). Subsequent to the filing of Marion's complaint, the state defendants filed a motion to dismiss in which they contended that the circuit court lacked jurisdiction over the case because Marion's complaint was untimely filed. The circuit court denied the motion to dismiss. Thereafter, the circuit court confirmed the Board's decision to issue the permit.

Marion appealed the circuit court's decision. On March 5, 2001, after briefing in the appellate court had been completed, SOIC filed a motion which sought to dismiss the appeal as moot. In that motion, SOIC explained that the permit which it had been granted by the Board had an expiration date of November 21, 2000. Under the Board's rules, this meant that SOIC had to "obligate" the permit, i.e., execute contracts and commit funding to the project, by November 21, 2000, or the permit would expire. SOIC noted that Marion had not sought a stay of the Board's decision from the trial court (see 735 ILCS 5/3-111 (West 1998)), nor had it sought a stay of the circuit court's judgment at either the trial or appellate levels (see 155 Ill. 2d R. 305(d)). SOIC stated that, because Marion had not sought a stay, and because SOIC risked expiration of its permit if it did not move forward with the project, SOIC had in fact begun and completed construction of the ASTC. SOIC noted in its motion that the ASTC had been completed on February 9, 2001, and that SOIC had spent over $6.6 million towards its completion. In a subsequent filing, SOIC also noted that the Department had granted SOIC an operating license for the ASTC in accordance with the Ambulatory Surgical Treatment Center Act (210 ILCS 5/1 et seq. (West 1998)) on March 7, 2001. Based on the above, SOIC argued to the appellate court that "[a]ny order reversing the Board's decision at this late juncture would not be able to undo what has already been done: the capital expenditure has already been made. Accordingly, this appeal should be dismissed as moot."

In its opinion filed March 29, 2001, the appellate court denied SOIC's motion to dismiss, finding that the appeal was not moot. 321 Ill. App. 3d 115, 122-23. In addition, the appellate court rejected the state defendant's argument that Marion's complaint was untimely filed in the circuit court. 321 Ill. App. 3d at 124-25. Finally, the appellate court reversed the circuit court's order, set aside the Board's decision to grant the permit, and remanded the cause to the Board with directions. The appellate court held that section 1110.1540(g) of title 77 was "a mandatory prerequisite to the issuance of a permit" (321 Ill. App. 3d at 128) and, although the Planning Act and related regulations did not require the Board to issue findings of fact unless the permit application was denied, the Board's failure to make specific findings of fact regarding compliance with section 1110.1540(g) made judicial review impossible. Thus, the appellate court remanded the matter to the Board for findings of fact regarding SOIC's compliance with the requirements of section 1110.1540(g). 321 Ill. App. 3d at 126-31.

The state defendants and SOIC filed separate petitions for leave to appeal. The state defendant's petition principally contested the appellate court's conclusion that Marion's complaint was timely filed in the circuit court. 177 Ill. 2d R. 315. The petition was allowed and the cause was docketed in this court as No. 91426. SOIC's petition for leave to appeal contested the appellate court's holding that reversed the circuit court and remanded the cause to the Board for findings of ...


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