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Adams v. Dep't of Health

March 20, 2009

DAVID ADAMS AND ROSE FRONTINO, BY JOSEPHINE MEICHUR AND MARIE RICHARDS WITH POWER OF ATTORNEY, PETITIONERS
v.
DEPARTMENT OF HEALTH, RESPONDENT



The opinion of the court was delivered by: Judge Leavitt

Argued: November 11, 2008

BEFORE: HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JIM FLAHERTY, Senior Judge.

OPINION

David Adams and Rose Frontino*fn1 (Residents) seek this Court's appellate review of the Department of Health's refusal to allow them to intervene in the Department's consideration of a change in ownership of a chain of nursing homes, some of which are licensed by the Department. Residents lived in two different Pennsylvania nursing homes affected by the change in ownership. In support of their petitions to intervene, Residents asserted that they had an interest in the regulatory issue before the Department by virtue of the fact they were "customers" of two affected nursing homes. The Department's review of a corporate reorganization of a chain of nursing homes is not a "proceeding" amenable to petitions to intervene and the denial of Residents' petitions was an interlocutory order that is not reviewable in this Court's appellate jurisdiction. Accordingly, we quash Residents' appeal.

Manor Care, Inc. is one of the nation's largest providers of nursing home services, with facilities in thirty states that provide skilled nursing services and rehabilitation treatment. In 2007, Manor Care's publicly-traded shares of stock were purchased by the Carlyle Group, a private equity firm. The transaction required numerous regulatory approvals, including one from Pennsylvania. Manor Care's 46 facilities in Pennsylvania are licensed and regulated under the Health Care Facilities Act, Act of July 19, 1979, P.L. 130, as amended, 35 P.S. §§448.101--448.904b, and this Act required a change in ownership application (CHOW Application) for each of Manor Care's Pennsylvania facilities.

On November 19, 2007, Residents each submitted a petition to intervene in the Department's review of Manor Care's CHOW Applications, invoking the intervention provisions of the General Rules of Administrative Practice and Procedure (General Rules), 1 Pa. Code §§35.27-35.32. Residents asserted that as residents of Manor Care long-term care facilities, they had standing to intervene lest the corporate reorganization "impact the quality of care" at those facilities. Reproduced Record at 3a, 9a (R.R. __).*fn2 In their petitions to intervene, Residents asserted the following "disputed issues of fact":

1. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that are adequately constructed, equipped and maintained, and safely and efficiently operated;

2. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that will provide safe and efficient services adequate for the care and treatment of patients or residents;

3. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that meet quality standards;

4. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that afford residents humane, courteous and dignified treatment;

5. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that have sufficient numbers of qualified, trained staff for the residents of the facilities;

6. Whether the license applicant(s) will be able to fulfill their statutory duties to provide facilities that have plans for quality assurance and risk management;

7. Whether the license applicant(s) meet the requirements of the Commonwealth regarding contingency financing and sufficient proof of funding for contingency and working capital requirements to fulfill the legal rights of its residents;

8. Whether the license applicant(s) meet financing requirements of the Commonwealth and, in light of the substantial purchase price paid and the resulting cost of capital required by the purchase, ...


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