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GRANT CENTER HOSPITAL OF MISSISSIPPI, INC., AND MISSISSIPPI HEALTH CARE COMMISSION v. HEALTH GROUP OF JACKSON

MAY 25, 1988

GRANT CENTER HOSPITAL OF MISSISSIPPI, INC., AND MISSISSIPPI HEALTH CARE COMMISSION
v.
HEALTH GROUP OF JACKSON, MISSISSIPPI, INC. D/B/A RIVERSIDE HOSPITAL



BEFORE HAWKINS, P.J.; ROBERTSON AND GRIFFIN, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I.

This is a hospital licensing dispute. The case began as a contest over which of two for-profit corporations would fill a fifty-eight bed need in children's and adolescent psychiatric care in the Rankin County/Greater Jackson area. Once state administrators awarded a certificate of need to one, the loser switched strategies and now vigorously asserts lack of need. En route we encounter a cute question of choice of (statutory) law in time. In the end, we reverse the Chancery Court and reinstate the administrative agency's decision.

 II.

 A.

 First, the cast of characters:

 Grant Center Hospital of Mississippi, Inc. (hereinafter" Grant Center ") is a for-profit corporation organized, chartered and existing by virtue of the laws of Mississippi. Grant Center is a wholly owned subsidiary of Hospital Corporation of America, which is one of the nation's largest health care providers.

 Health Group of Jackson, Mississippi, Inc., is a Tennessee corporation which for years has operated a private psychiatric hospital in the Greater Jackson/Rankin County area using the trade name Riverside Hospital (and thus is hereinafter referred to as" Riverside "). Riverside is in turn owned by Health Group, Inc., another Tennessee corporation.

 The Mississippi Health Care Commission was created by legislative enactment, to be specific, the Mississippi Health Care Commission Law of 1979, Miss. Code Ann. 41-7-171, et seq. (1981). Effective July 1, 1986, the powers and functions of the Commission were transferred to the State Department of Health under the Mississippi Health Services Reorganization Act of 1986. See Miss. Laws, ch. 437, 35, p.412 (1986). For purposes of convenience, throughout this opinion the term" Commission "will be used to refer to both the Commission and its successor, the Department of Health.

 B.

 The case began and continues over Grant Center's efforts

 to establish a children's and adolescent psychiatric care hospital in the Greater Jackson/Rankin County area and Riverside's efforts to keep them from it. But, first, a bit more background.

 Mississippi's scheme of health-care regulation was adopted pursuant to a now-repealed federal statute, the National Health Planning and Resources Development Act (NHPRDA), 42 U.S.C. 300K et seq. This act once required that each state establish a Statewide Health Coordinating Council. The Council was to be responsible for preparing a state health plan, which should state the extent to which new health care facilities needed to be constructed or acquired. 42 U.S.C. 300m-3 (c)(2)(A). The state was to review its health plan at least triennially and revise it as necessary.

 The Act also required each state to administer a Certificate of Need (CON) program. 42 U.S.C. 300m 2 (a)(4)(B). As a general matter health care facilities could not be constructed, new health services added, or major health care capital expenditures incurred without prior approval by the designated state agency through the issuance of a certificate of need. The CON procedure was conceived as" `the basic component in an overall effort to control the unnecessary capital expenditures which contribute so greatly to the total national health bill. "' National Germedical Hospital and Gerontology Center v. Blue Cross of Kansas City, 452 U.S. 378, 385-86, 101 S. Ct. 2415, 69 L.Ed.2d 89, 97 (1981) (quoting S.Rep.No. 96-96, at 5 (1979)).

 To comply with the federal act as it once existed the Mississippi legislature enacted the Mississippi Health Care Commission Law of 1979, Miss. Code Ann.41-7-171 et seq. This law created the Commission and empowered it to implement the CON regulatory process. Miss. Code Ann. 41-7-193 established the standards for issuance of CONs for new institutional health services and other projects.

 Initially, state law did not incorporate the federal requirement that decisions to issue CONs comply with the current state health plan. On April 9, 1983, however, the following language was added to subsection (1) of the statute:

 A certificate of need shall not be granted or issued to any person for any proposal, cause or reason, unless the proposal has been reviewed for consistency with the specifications and the criteria established by the commission and substantially complies with the projection of need

 as reported in the most current state health plan.

 Miss. Code Ann. 41-7-193 (1) (Supp.1983); see Miss. Laws, ch. 484, 6, p.508 (1983).

 This is the state of the law at the point when today's litigants begin contesting for a CON to provide an adolescent and child psychiatric hospital in the Rankin County/Greater Jackson area. Intriguing questions are added to this appeal by virtue of the fact that both state and federal legislatures have enacted further since that time and during the course of this litigation.

 More modestly, the Mississippi legislature amended Section 41-7-193 (1), effective July 1, 1985, so that the phrase" most current state health plan "has been replaced with the phrase" the state health plan in effect when the application was submitted. "See Miss. Laws ch. 534, 9 (1985).

 The Congress has been more bold. The federal law that started it all has been relegated to the junk heap. The Omnibus Health Bill (Senate Bill 1744) which became effective on November 14, 1986, repealed the Federal Health Planning Program. As we write, there are no ...


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