ManorCare Health Services, LLC v. Illinois Health Facilities & Services Review Board
2016 IL App (2d) 151214
| Ill. App. Ct. | 2017Background
- ManorCare applied for a certificate of need to build a 130‑bed skilled‑nursing facility in Crystal Lake, McHenry County, citing population aging, a 2008 bed‑need projection for 469 additional beds by 2018, and lack of private rooms.
- The three nearby nursing homes (The Springs, Fair Oaks, Crystal Pines) opposed, noting ongoing renovations/expansions and that many area facilities were operating below the Board’s 90% target occupancy.
- Board staff found ManorCare met some criteria but failed the “service accessibility,” “unnecessary duplication/maldistribution,” and “impact on other area providers” criteria because many facilities within 30–45 minutes were under‑utilized; staff also noted potential distortion from "dead beds."
- The Board denied the application after an administrative hearing and the ALJ recommended denial; ManorCare sought administrative review in the circuit court, which reversed and ordered issuance of the certificate of need.
- The appellate court consolidated appeals by the Board and objecting facilities and reviewed whether the Board’s denial was clearly erroneous or arbitrary and capricious and whether the ALJ properly excluded ManorCare’s evidence about unrelated prior Board approvals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Board's denial was clearly erroneous / arbitrary & capricious based on Current Utilization criteria | ManorCare: record (demographics, bed‑need projection, Medicare displacement, lack of private rooms, dead beds) showed need and compliance | Board: many nearby facilities under target occupancy; noncompliance with service accessibility, maldistribution, and impact criteria justified denial | Held: Board's decision not clearly erroneous or arbitrary; substantial record support for denial |
| Whether Board improperly rejected its own bed‑need projection (10‑year projection) | ManorCare: Board disregarded its prior 10‑year bed‑need projection for McHenry County | Board: bed‑need projection is a non‑dispositive planning factor; Board may deny despite projected need; also statute changed to 5‑year projections | Held: Board did not improperly reject its projection; projections are one factor and not binding |
| Admissibility of evidence about the Board’s prior approvals of unrelated projects | ManorCare: prior approvals despite noncompliance with Current Utilization criteria show arbitrary departure from past practice and are relevant to conformity/consistency | Board/ALJ: unrelated projects are not sufficiently comparable and the proffered evidence is irrelevant to whether ManorCare’s project met the standards | Held: ALJ did not abuse discretion in excluding evidence of unrelated projects as irrelevant |
| Whether exclusion of ManorCare’s offer of proof or ALJ’s refusal to let it be made was reversible error | ManorCare: exclusion and refusal to allow offer of proof prejudiced its case | Board/ALJ: the written offer of proof and documents are in the record; purpose of offer preserved error but record contains the proffer | Held: No reversible error — detailed written offer and supplemented record preserved the content, so exclusion does not warrant reversal |
Key Cases Cited
- AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill. 2d 380 (Illinois 2001) (standard for reviewing mixed questions of law and fact; reversal only if record leaves definite and firm conviction a mistake was committed)
- United States v. United States Gypsum Co., 333 U.S. 364 (U.S. 1948) (standard articulating the ‘clearly erroneous’ test)
- Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462 (Illinois 1988) (criteria for finding administrative action arbitrary and capricious)
- Marion Hospital Corp. v. Illinois Health Facilities Planning Board, 324 Ill. App. 3d 451 (Ill. App. 2001) (Board may justify overlooking a criterion based on particular local needs)
- Charter Medical of Cook County, Inc. v. HCA Health Services of Midwest, Inc., 185 Ill. App. 3d 983 (Ill. App. 1989) (projected bed need is a critical but non‑dispositive factor)
- Provena Health v. Illinois Health Facilities Planning Board, 382 Ill. App. 3d 34 (Ill. App. 2008) (appellate court will not reweigh evidence when Board’s decision is supported)
- Caliendo v. Martin, 250 Ill. App. 3d 409 (Ill. App. 1993) (excluding evidence of unrelated disciplinary decisions is permissible where circumstances differ)
- Commonwealth Edison Co. v. Illinois Commerce Comm’n, 180 Ill. App. 3d 899 (Ill. App. 1988) (agency’s abrupt unexplained departure from longstanding practice can be arbitrary and capricious)