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COMMONWEALTH PENNSYLVANIA v. REHAB HOSPITAL SERVICES CORP. (06/12/89)

decided: June 12, 1989.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, PETITIONER,
v.
REHAB HOSPITAL SERVICES CORP., RESPONDENT. LEE HOSPITAL, PETITIONER, V. COMMONWEALTH OF PENNSYLVANIA; DEPARTMENT OF HEALTH AND REHAB HOSPITAL SERVICES CORPORATION AND REHABILITATION HOSPITAL OF ALTOONA, RESPONDENTS. REHAB HOSPITAL SERVICES CORPORATION AND REHABILITATION HOSPITAL OF ALTOONA, PETITIONERS, V. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, RESPONDENT. REHAB HOSPITAL SERVICES CORPORATION AND REHABILITATION HOSPITAL OF ALTOONA, PETITIONERS, V. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF HEALTH, RESPONDENT



PETITION FOR REVIEW (STATE HEALTH FACILITY HEARING BOARD)

COUNSEL

Darius G.C. Moss, Asst. Counsel, Harrisburg, for petitioner/respondent, Dept. of Health.

Seymour J. Schafer, Charles M. Means, Markel, Schafer & Means, Pittsburgh, for petitioner/intervenor, Lee Hosp.

Paul J. Carey, Jr., Harrisburg, for State Health Facility Hearing Bd.

Edward F. Shay, Philadelphia, James O'Toole, Jr., and Emily A. Zuzelo, Saul, Ewing, Remick & Saul, for respondents/petitioners, Rehab. Hosp. Services Corp. and Rehab. Hosp. of Altoona.

Doyle and Smith (p.), JJ., and Kalish, Senior Judge.

Author: Doyle

[ 127 Pa. Commw. Page 188]

Before the Court are the consolidated appeals of Lee Hospital (Lee) and the Department of Health (Department) from an order of the State Health Facilities Hearing Board

[ 127 Pa. Commw. Page 189]

(Board) which reversed the Department's grant of a Certificate of Need (CON) to Lee and the appeal of Rehab Hospital Services Corporation (RHSC) and Rehabilitation Hospital of Altoona (RHA) from the Board's order which denied RHA standing to appeal to the Board the Department's grant of a CON to Lee, and which failed to address several issues raised by RHSC and RHA in their appeal to the Board.

The Board made the following relevant findings: On September 18, 1984, Lee*fn1 filed an application for a CON with the Department for the establishment of a twenty-seven bed discrete comprehensive medical rehabilitation unit and an adjacent ten bed medical/surgical swing unit. That application was opposed by RHSC.*fn2 On March 4, 1985, following a review of the CON application by the Keystone Health Systems Agency (KHSA)*fn3 and the Department, the Department disapproved Lee's CON application. On April 5, 1985, Lee filed an appeal with the Board from the denial of its application. On April 23, 1985, RHSC filed a petition to intervene as a party appellee in support of the Department's denial of Lee's application. Lee, however, opposed RHSC's petition to intervene. On May 24, 1985, the petition to intervene was granted. The issue of whether intervention was properly granted was never appealed to this Court. On May 14, 1986, the Board affirmed the decision of the Department.

Lee then filed an appeal in this Court, but, as indicated above, it did not contest RHSC's standing or the Board's order granting RHSC status as a party. On July 13, 1986, RHSC intervened as of right in the appeal lodged with this Court. Oral argument was scheduled for March 23, 1987,

[ 127 Pa. Commw. Page 190]

    but was continued, at Lee's request, as it stated that it intended to seek an independent settlement with the Department. On April 29, 1987, counsel for the Department notified RHSC of a proposed settlement agreement between the Department and Lee. On May 8, 1987, RHSC's counsel sent a letter to the Department rejecting the proposed agreement. On May 11, 1987, the Department filed with this Court a second motion for continuance. In its motion, the Department stated that a settlement agreement had been reached between the Department and Lee in which Lee would discontinue its appeal and the Department would grant a CON to Lee. On May 12, 1987, this Court issued an order denying the Department's motion for a continuance, and further directed all parties to argue, on May 18, 1987, their positions concerning the legality of the proposed settlement. On May 15, 1987, without prior notice to RHSC and contrary to this Court's order to argue the case on May 18th, Lee discontinued its appeal in this Court, and on the same day the Department issued a CON to Lee to provide rehabilitation services.

By letter dated May 22, 1987, RHSC requested that the Secretary of Health hold a public hearing for the purpose of reconsideration of the Department's decision to grant Lee a CON. On May 27, 1987, counsel to the Department provided RHSC with a copy of the Department's settlement agreement with Lee, and a letter approving Lee's CON application. On June 1, 1987, RHSC and RHA filed timely appeals to the Board from the Department's "settlement agreement" approving the CON. On June 23, 1987, the Department rejected RHSC's request for reconsideration, and RHSC and RHA timely filed further appeals from that decision with the Board.

During this time, RHSC and RHA also filed an application with this Court for a supersedeas of the Department's determination. Lee then filed a motion to intervene and a motion to quash, both of which were granted. On July 17, 1987, this Court rendered a decision stating that it did not have jurisdiction since RHSC and RHA had failed to exhaust

[ 127 Pa. Commw. Page 191]

    their administrative remedies, and that the proper appeal ...


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