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Baptist Memorial Hospital-North Mississippi Inc. v. Mississippi State Department of Health

Court of Appeals of Mississippi

October 23, 2018

BAPTIST MEMORIAL HOSPITAL-NORTH MISSISSIPPI INC. D/B/A BAPTIST MEMORIAL HOSPITAL-NORTH MISSISSIPPI AND BMH NORTH MISSISSIPPI IMAGING SERVICES LLC D/B/A OXFORD DIAGNOSTIC CENTER APPELLANTS
v.
MISSISSIPPI STATE DEPARTMENT OF HEALTH AND OXFORD PRE-OP & IMAGING CENTER LLC APPELLEES

          DATE OF JUDGMENT: 08/08/2017

          HINDS COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT HON. WILLIAM H. SINGLETARY JUDGE

          ATTORNEY FOR APPELLANTS: BARRY K. COCKRELL

          ATTORNEYS FOR APPELLEES: JEFFREY SCOTT MOORE STEVEN BLAKE ADAMS

          BEFORE LEE, C.J., GREENLEE AND TINDELL, JJ.

          LEE, C.J.

         ¶1. Baptist Memorial Hospital-North Mississippi Inc. d/b/a Baptist Memorial Hospital- North Mississippi and BMH North Mississippi Imaging Services LLC d/b/a Oxford Diagnostic Center (collectively "Baptist") opposed Oxford Pre-Op & Imaging Center LLC's (OPIC) application for a Certificate of Need (CON) for magnetic resonance imaging (MRI) services. The Mississippi State Department of Health (MSDH) later granted the CON. Baptist appealed the MSDH's decision to the Hinds County Chancery Court, First Judicial District, and the chancery court affirmed the MSDH's grant of the CON.

         ¶2. Baptist now appeals to this Court, arguing that the chancery court erred when it affirmed the MSDH's decision, claiming that OPIC's CON application did not substantially comply with the 2015 State Health Plan (SHP). Specifically, Baptist contends that OPIC's application (1) did not meet the SHP's "Need Criterion"; (2) did not comply with the SHP's policy on utilization of existing MRI units; and (3) did not comply with the "General Review Criterion 4" regarding economic viability. Finding that the MSDH's decision to grant OPIC's CON application was supported by substantial evidence, we affirm.

         BACKGROUND FACTS AND PROCEDURAL HISTORY

         ¶3. OPIC is a free-standing imaging center in Oxford, Lafayette County, Mississippi. Prior to receiving CON approval for MRI services, OPIC already offered pre-operative and imaging diagnostic services, including laboratory, x-ray, CT, and EKG services. On August 27, 2015, OPIC filed with the MSDH a notice of intent to apply for a CON to acquire MRI equipment and begin offering MRI services. OPIC then filed its CON application on February 22, 2016. In its application, OPIC proposed to lease a 1.5 Tesla MRI machine and to begin providing MRI services at its existing facility. OPIC also proposed to lease and renovate existing space adjacent to its imaging facility to accommodate the acquisition of the MRI unit. According to its CON application, OPIC's objective was to provide residents of Lafayette County and surrounding areas with "same day" MRI services to "alleviate the current unacceptably long waiting times to receive an MRI from facilities located in Lafayette County."

         ¶4. OPIC completed its CON application with the aid of health planning expert, Noel Falls, and Joe Repper, the Chief Financial Officer for North Mississippi Health Services Inc.-OPIC's joint-venture partner. Falls developed population-based statistical projections to show that OPIC would meet the SHP's "Need Criterion" required to obtain a CON for MRI services-a minimum threshold of 2, 700 MRI procedures by the end of its second year of operation. Based on the population of OPIC's service area[1] and the MRI Use Rate, [2] Falls projected that OPIC would perform a total of 3, 381 MRI procedures by the end of its second year. Additionally, OPIC supported its CON application with affidavits from physicians and nurse practitioners who projected they would collectively refer 3, 288 procedures during OPIC's first year of operation and 3, 996 procedures during its second year. Following an error correction, the projections were amended to reflect 3, 120 procedures during OPIC's first year and 3, 804 procedures during its second year. Thus, OPIC projected in its CON application that it would not only meet the 2700 procedure threshold but easily exceed it.

         ¶5. At the time of OPIC's application, Baptist was the sole MRI provider in Oxford and Lafayette County, Mississippi. Baptist utilized two units: a 3.0 Tesla fixed-site unit at its hospital site (BMH-NM) and a 1.5 Tesla fixed-site unit at its diagnostic center (ODC). At least as early as 2013, Baptist began to experience backlogs in MRI scheduling due to the increased demand for services. Patients' wait times for non-emergent MRIs routinely exceeded one week and at times were up to two weeks. To help alleviate the backlog and decrease wait times, Baptist extended its hours for services at both the BMH-NM and the ODC sites, reduced its appointment slots from 60 minutes to 45 minutes, and began opening the ODC on the weekends. Yet even with these efforts, Baptist was still unable to accommodate the demand for MRI services and reduce wait times. As a result, around November 2014, Baptist began making its own plans to add a third MRI unit in Oxford.

         ¶6. In an email dated November 5, 2014, Peyton Warrington, BMH-NM's Chief Operating Officer, proposed two routes for adding a third MRI site: (1) relocating the hospital's 3T magnet to the ODC, relocating the ODC's 1.5T to the new hospital (then under construction) and adding an "Open Magnet" unit at the ODC, or (2) relocating the hospital's 3T magnet to the new hospital and purchasing a new 1.5T magnet for the new hospital. ODC's board of managers also discussed the need for a third MRI unit by potentially acquiring a second unit for the ODC. Board minutes from January 25, 2015 reflected that "Discussion of potential MRI strategy to be implemented over next several years was discussed. The need for both 3.0 MRI and a true open magnet was discussed."

         ¶7. Baptist formalized its plans for adding a third MRI unit in Oxford in a document titled "Oxford Diagnostic Center: MRI Strategy." The MRI-strategy document stated that there were "currently 2 MRIs in the Oxford-Lafayette community" and that based on Baptist's research, it "believe[d] the community c[ould] support a third MRI." The document acknowledged that "[t]he ability to accommodate a 3rd MRI in the community leaves the door open for another investor group/system to enter the market" and proposed a plan "[i]n order to avoid this scenario[.]" The strategy also included that "consideration should be given as to the need for a mobile [unit] during the interim in order to secure the slot for the 3rd MRI."

         ¶8. So, when Baptist learned of OPIC's notice of intent to seek a CON and enter Oxford/Lafayette County's market with a third MRI fixed-site unit, Baptist expedited its efforts to secure the third MRI slot in Oxford by acquiring a temporary, mobile MRI unit. The MSDH approved the utilization of a temporary, mobile MRI unit only until the construction of the new hospital in Oxford was completed.

         ¶9. On May 16, 2016, following a review and staff analysis of OPIC's CON application, the MSDH published its recommendation that OPIC's MRI project be approved. Baptist requested a public hearing on the application, which was held October 24 to 26, 2016, where Baptist opposed OPIC's CON application. All parties were represented by counsel and presented testimony and exhibits during the hearing. In a forty-six-page "Findings of Fact, Conclusions of Law and Recommendation," the MSDH hearing officer concluded that

OPIC presented substantial and credible evidence in its CON Application and during the hearing that its project is in substantial compliance with the 2015 SHP standards and criteria for the acquisition or control of MRI equipment and the offering of MRI services, as well as the general review criteria contained in the CON Review Manual. For these reasons, the Hearing Officer concurs with the Department's Staff Analysis and recommends that the State Health Officer approve OPIC's project.

         ¶10. On April 10, 2017, the MSDH issued its approval of OPIC's application, granting OPIC a CON for MRI services. Baptist appealed the decision to the chancery court, which affirmed the MSDH's decision granting the CON. Baptist now appeals to this Court, and we address its issues in turn. Additional facts are discussed as relevant to the analysis.

         STANDARD OF REVIEW

         ¶11. The judicial standard of review in an appeal from the MSDH's order granting or ...


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