Certificate of Need

Birchansky Real Estate, L.C. v. Iowa Dep't of Pub. Health, No. 05-2019 (Iowa Aug. 10, 2007)

The Supreme Court of Iowa reversed a lower court's ruling that a certificate of need ("CON") was not required for an ophthalmologist's proposal to open an outpatient surgical center at a location previously occupied by a hospital's outpatient surgical center. In reaching this conclusion, the court held that Iowa's statutory CON exemption did not apply and that the Department of Public Health acted reasonably when it denied the ophthalmologist's CON application.

The court concluded that the statutory exemption did not apply to the ophthalmologist's CON application because there was no "change in ownership, licensure, organizational structure, or designation of the type of institutional health facility." Rather, the hospital simply moved its surgery center back to its main campus. The court reasoned that only the facility's location changed, and, because the CON exemption contemplates a transfer of operations between parties with its use of the terms "predecessor" and "successor," the ophthalmologist did not have the right to operate a similar surgery center at the same location without obtaining a CON.

The court upheld the Department of Public Health's denial of the ophthalmologist's CON application, noting the Department's conclusion that the area's two local hospitals and existing surgery center had sufficient operating room capacity to accommodate the procedures previously done in the hospital's off-campus surgery center. Additionally, the court ruled that "patients would not be affected by a denial of [the] CON application because the [existing surgery center] provided a similar atmosphere to [the] proposed facility at similar costs."