UNITYPOINT HEALTH CEDAR RAPIDS d/b/a ST. LUKE'S HOSPITAL, Plaintiff-Appellant,
IOWA DEPARTMENT OF PUBLIC HEALTH, STATE HEALTH FACILITIES COUNCIL, Defendant-Appellee, and MERCY HOSPITAL CEDAR RAPIDS d/b/a MERCY MEDICAL CENTER, Intervenor/Appellee.
from the Iowa District Court for Polk County, Eliza J. Ovrom,
hospital appeals from the district court's decision on
judicial review affirming the State Health Facilities
Council's decision to grant a certificate of need to
another nearby hospital, thereby allowing that hospital to
establish its own open-heart surgical program.
Rebecca A. Brommel and Douglas E. Gross of Brown, Winick,
Graves, Gross, Baskerville and Schoenebaum, PLC, Des Moines,
J. Miller, Attorney General, and Tessa Register and Heather
L. Adams, Assistant Attorneys General, for appellee.
N. McIntosh and William J. Miller of Dorsey & Whitney
LLP, Des Moines, for appellee intervenor.
by Potterfield, P.J., Doyle, J., and Danilson, S.J. [*]
POTTERFIELD, PRESIDING JUDGE.
Health Cedar Rapids, doing business as St. Luke's
Hospital, appeals from the district court's ruling on
judicial review affirming the State Health Facilities
Council's decision to issue a Certificate of Need (CON)
to Mercy Hospital Cedar Rapids,  which allows Mercy to
establish its own open-heart surgical program in its Cedar
appeal, St. Luke's maintains the Council's decision
to grant the CON should be reversed because the Council's
interpretation of the minimum utilization rule-found in Iowa
Administrative Code rule 641-203.2(3)(a)(1)-as a guideline
rather than a mandate is either erroneous, see Iowa
Code § 17A.19(10)(c) (2015), or "irrational,
illogical, or wholly unjustifiable," see Iowa
Code § 17A.19(10)(l). Additionally, St.
Luke's challenges whether some of the findings made by
the Council are supported by substantial evidence in the
record, see Iowa Code § 17A.19(10)(f),
including some findings that are required by Iowa Code
section 135.64 before a CON can be issued.
2015, Mercy sent a letter to the Iowa Department of Public
Health advising it of the hospital's intention to offer
open-heart surgery at its Cedar Rapids hospital. Mercy
followed that letter by filing a CON application in August.
In support of its application, Mercy asserted that each year,
approximately 150 of Mercy's patients have to go outside
the Mercy system for their cardiac surgery. In a later
response to the department's request for more
information, Mercy again asserted that it estimated a volume
of 150 patients for cardiac surgical services, with a 2%
growth projected each year following the initial year.
public hearing on the application was held before the State
Health Facilities Council on November 15, 2016. St.
Luke's participated in the hearing as an "affected
person" and spoke out against the granting of the CON.
See Iowa Code § 135.61(1)(c) (including in the
definition of "affected persons" "each
institutional health facility . . . which is located in the
geographic area which would appropriately be served by the
new institutional health service proposed in the
dispute in the hearing was whether the minimum utilization
rule was a guideline to be used by the Council in reaching
its ultimate decision or a mandatory requirement that the
Council must not grant the CON unless Mercy projected at
least 200 procedures annually. The rule, Iowa Administrative
Code rule 641-203.2(3)(a)(1), states: "Adult
cardiovascular surgical programs should project an annual
minimum rate of over 200, or no approval shall be granted.
Higher case loads over 200 per annum, are encouraged."
the hearing took place, legal counsel to the Council issued
an email regarding the application of the rule. Counsel
advised it should be considered discretionary, noting that
the rule used both the terms "should" and
"shall." Additionally counsel stated,
"Interpreting the rule as a guideline would be in
keeping with the Council's longstanding practice of
applying utilization requirements in its administrative rules
. . . as guidelines only and not mandatory
requirements." Following counsel's email but before
the CON hearing, St. Luke's petitioned the Department of
Public Health for a declaratory ruling on the proper
interpretation of the rule. The department denied St.
following the public hearing, the Council voted 3-2 to grant
Mercy's request for the CON.
written ruling that followed, the Council ruled that the
minimum utilization rule
should be interpreted as a guideline in light of (1) the
Council's prior construction of this rule as guideline in
approving a CON to an applicant which projected below 200
surgeries per year; (2) the totality of the language of the
rule-which states programs should project a certain
number of cases and that higher case loads are merely
encouraged, not required-providing a discretionary
approach to the utilization issue; and (3) the Council's
longstanding prior interpretation of the utilization
standards in chapter 203 as guidelines.
Council found "that patients needing urgent cardiac
surgery are waiting an average of four to nine days due to
limited access to cardiac surgery in the community.
Additionally, patients needing elective open heart surgery
found wait times increase from 4.9 weeks in 2014 to 5.3 weeks
in 2015." The increase in wait time "increased
costs related to additional hospital stays, increased
anxieties for the patients and their families, and potential
loss of wages due to the inability to work." The Council
also recognized that patient stress "is exacerbated by
having to leave the Mercy system to receive care in a new
health system." In making this finding, the Council
noted that when St. Luke's requested a CON in 2014 to
begin offering radiation therapy services-a service patients
historically had to leave St. Luke's and go to Mercy
for-the Council had granted its request, in part, because:
St. Luke's cancer patients in need of radiation therapy
must currently leave the facility and provider network,
resulting in each patient being treated by a new set of
health providers and supporting team members from a different
health care system. This movement between systems can result
in delays, unnecessary costs, and duplication of testing and
Council's written decision included findings as to the
necessary four factors contained in Iowa Code section
Luke's filed a request for rehearing, which the Council
denied. St. Luke's then filed a petition for judicial
review. After full briefing on the issues and a reported
hearing, the district court affirmed the Council's
decision to issue a CON to Mercy for its open-heart surgery
Score and ...