Mo. SC upholds state rule regarding new hospitals

By Jessica M. Karmasek | Apr 18, 2012


JEFFERSON CITY, Mo. (Legal Newsline) - The Missouri Supreme Court ruled Tuesday that a state rule exempting new hospitals costing less than $1 million from the statutory requirement of obtaining a certificate of need is valid.

St. John's Mercy Health System appealed the St. Louis County Circuit Court's dismissal of its claim challenging the rule, promulgated by the Missouri Health Facilities Review Committee and applied to Patients First Community Hospital.

In its appeal to the state's high court, St. John's challenged the validity of the MHFRC rule.

The Court, in its nine-page opinion, said the rule regarding new hospitals is legal.

Chief Justice Richard B. Teitelman, who authored the Court's unanimous ruling, said because the health facilities review committee determined -- after the case was dismissed -- that an applicant need not obtain a certificate of need, the hospital's challenge to the rule is ripe for review.

"Application of the rule is no longer a hypothetical probability; it is an action that has occurred," he wrote.

The Court also said the hospital has standing to challenge the rule.

"St. John's is an economic competitor with any party within its market that is exempt from obtaining a certificate of need. St. John's revenues are affected directly by the number of patients. The number of patients that St. John's serves is affected by the number of health care facilities with which it competes," Teitelman wrote.

"St. John's is adversely affected because the New Hospital Rule allows competitors to enter the marketplace without demonstrating the community's need for additional health care services."

However, the challenged rule does not conflict with the statute, which applies in part to new facilities and in part to existing facilities, the Court said.

"New hospitals cannot 'change' their number of beds, add new services relative to those provided the 'previous' year or reallocate beds from an 'existing' facility," Teitelman wrote.

"Therefore, contrary to St. John's interpretation, new hospitals are not necessarily subject to each of the seven paragraphs of section 197.305(9)."

The commission, therefore, was within its authority to promulgate the rule, the Court said.

The Court affirmed the circuit court's judgment, modifying it to deny relief to the hospital.

From Legal Newsline: Reach Jessica Karmasek by email at

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