In re Progressive Macedonia Real Estate, L.L.C.
2017 Ohio 8374
| Ohio Ct. App. | 2017Background
- Progressive Macedonia Real Estate, LLC applied for a certificate of need (CON) to develop a new 98‑bed nursing facility in Macedonia by relocating 98 beds from University Park in Akron; University Park was stipulated to be in poor condition and in need of replacement.
- ODH declared the application complete, approved the CON, and Northfield Village (nearby provider and bed‑owner) administratively appealed to ODH and then to the Tenth District Court of Appeals.
- Northfield Village raised five primary challenges: alleged voiding of the CON under R.C. 3702.523(A) due to a broker listing, lack of legal authority to transfer beds because of a lender lien, understatement of project costs, adverse impact on existing providers (staffing/market share), and lack of need for the project.
- The hearing examiner recommended approval; the ODH director adopted the recommendation and issued an adjudication order granting the CON.
- On appeal the court reviewed whether the director’s order was supported by reliable, probative, and substantial evidence and was in accordance with law under R.C. 3702.60(F)(3).
Issues
| Issue | Plaintiff's Argument (Northfield Village) | Defendant's Argument (Progressive/ODH) | Held |
|---|---|---|---|
| 1. CON void under R.C. 3702.523(A) (brokerage/listing) | Progressive’s broker marketed properties including the Macedonia project; that contemplates transfer and voids the CON | CEO testified Macedonia was not listed, no sale agreement, brochure was a marketing ‘carrot,’ broker distribution stopped | Evidence supported director’s credibility finding; CON not voided |
| 2. Authority to relocate beds (lien by Home Savings & Loan) | Lienholder’s security interest prevents legal transfer of bed rights | Progressive disclosed lien, financing plans, and evidence that lien would be released at closing | Director reasonably relied on financing evidence; CON approved |
| 3. Project costs understated | Progressive omitted/underestimated site, utility, stormwater, environmental costs | Progressive presented cost estimates, tapped past experience, and allowed regulatory overrun margin | Examiner found Progressive’s cost evidence sufficient; CON upheld |
| 4. Adverse impact on existing providers (staffing, market share) | New facility will worsen local staffing shortages and harm Northfield Village’s utilization/finances | Competition is inherent; Macedonia has no skilled nursing; demographic growth will absorb capacity | Some competitive impact expected but not sufficiently onerous to deny CON |
| 5. Need for project in Macedonia | Area already has many facilities; no demonstrated need | University Park needs replacement; Macedonia has no skilled nursing and aging population projected to grow | Record contains substantial evidence of need; CON stands |
Key Cases Cited
- Our Place, Inc. v. Ohio Liquor Control Comm., 63 Ohio St.3d 570 (reliable, probative, and substantial evidence defined)
- In re Wedgewood Health Care Realty, LLC, 176 Ohio App.3d 554 (standard that court reviews presence of requisite quantum of evidence in CON appeals)