MISSISSIPPI METHODIST HOSPITAL AND REHABILITATION CENTER INC v. MISSISSIPPI STATE DEPARTMENT OF HEALTH LLC (2025)

¶1. Mississippi Methodist Hospital and Rehabilitation Center Inc. brings this appeal from the final judgment of the Hinds County Chancery Court affirming the Mississippi State Department of Health's grant of Encompass Health Rehabilitation Hospital of Flowood LLC's application for a certificate of need (CON). After review, we affirm the judgment of the chancery court.

FACTS AND PROCEDURAL HISTORY

¶2. Mississippi Code Section 41-7-187 (Rev. 2023) established “a statewide health certificate of need program.” Mississippi Code Section 41-7-173(b) (Supp. 2024) defines a CON as

a written order of the State Department of Health setting forth the affirmative finding that a proposal in prescribed application form, sufficiently satisfies the plans, standards and criteria prescribed for such service or other project by Section 41-7-171 et seq., and by rules and regulations promulgated thereunder by the State Department of Health.

To construct or develop a new healthcare facility, a CON must first be obtained from the Department authorizing the operation of the facility. Miss. Code Ann. § 41-7-191(1)(a) (Supp. 2024). The Department is empowered by Mississippi Code Section 41-7-185(g) (Rev. 2023) to “[p]repare, review at least triennially, and revise, as necessary, a State Health Plan, as defined in Section 41-7-173 ․” Mississippi Code Section 41-7-173(t) (Supp. 2024) defines the State Health Plan (SHP) as “the sole and official statewide health plan for Mississippi which identifies priority state health needs and establishes standards and criteria for health-related activities which require certificate of need review in compliance with Section 41-7-191.”

¶3. In accordance with these statutes, the Department promulgated a SHP that identified a need for additional comprehensive medical rehabilitation (CMR) beds. Miss. Dep't of Health, Div. of Health Plan. & Res. Dev., FY2022 Miss. State Health Plan § 603.04 (effective May 26, 2022), https://msdh.ms.gov/page/resources/16691.pdf. CMR beds are split into two categories: Level I and Level II. Level I treats “disabilities such as spinal cord injury, brain injury, stroke, congenital deformity, amputations, major multiple trauma, polyarthritis, fractures of the femur, and neurological disorders.” Id. § 600. Level II treats “disabilities other than spinal cord injury, congenital deformity, and brain injury.” Id.

¶4. On February 22, 2022, Encompass filed an application for a CON after the Department identified a need for “seven (7) Level I beds and ninety-four (94) additional Level II CMR beds.” Id. § 601. Encompass proposed to build a new facility in Flowood consisting of seven Level I CMR beds and forty-three Level II CMR beds. That same day, Baptist Memorial Rehabilitation Hospital - Madison LLC (Baptist) filed an application for a CON, seeking authorization to build a facility in Madison consisting of five Level I CMR beds and thirty-five Level II CMR beds. The Department conducted a staff analysis for each application and recommended their approval with modification of each proposal. Both Encompass and Baptist agreed to adjust the requested number of beds—Encompass would seek approval for four Level I and forty-six Level II CMR beds, and Baptist would seek approval for three Level I and thirty-seven Level II beds. By agreeing to adjust the number of beds sought, the applications of Encompass and Baptist were determined to be no longer competing, and the Department staff analyses recommended the approval of both applications subject to the modifications.

¶5. On March 23, 2022, Methodist submitted a letter of opposition to the Encompass CON application. On April 15, 2022, Methodist requested a public hearing on both the Encompass CON and the Baptist CON applications as an “affected person”¹ pursuant to Section 41-7-173(a) and Mississippi Code Section 41-7-197(2) (Rev. 2023). Methodist is located on the University of Mississippi Medical Center campus in Jackson. Methodist provides CMR services and has provided those services in Jackson since 1975. Methodist requested to consolidate the Encompass and Baptist hearings.

For noncompeting, pending CON applications, the [Department] rule is that the hearing is for [the Department to] consider the CON application on its own merits, therefore parties must “refrain from discussing or offering evidence concerning any other pending or yet-to-be-offered application that is not relevant to the matter in issue.”

Encompass Health Rehab. Hosp. of Flowood, LLC v. Miss. Methodist Hosp. & Rehab. Ctr., Inc., 383 So. 3d 291, 299 (Miss. 2024) (quoting 15 Miss. Admin. Code Pt. 9-91, R. 4.13.2 (effective Nov. 11, 2023), https://www.sos.ms.gov/adminsearch/ACCode/00000203c.pdf). Because the Encompass and Baptist CON applications were determined to be noncompeting, the hearing officer denied the request to consolidate and “ruled that the Baptist application would not be admissible as evidence in the Encompass hearing.” Id. at 295.

¶6. Once a hearing is requested, the Department appoints an independent hearing officer to oversee the proceedings. § 41-7-197(2). At the close of the hearing, the hearing officer makes a recommendation which, along with the complete record of the hearing, is then reviewed by the state health officer. Id. The state health officer makes the ultimate decision whether to issue the CON. Id. The Encompass hearing proceeded, and the hearing officer heard evidence from both Methodist and Encompass as to whether Encompass had shown that its proposed facility met the needs of the SHP as well as the general considerations and requirements laid out in the CON review manual. The hearing spanned several days in July and August 2022. Encompass, 383 So. 3d at 299. At its end, “the hearing officer closed the taking of evidence and the record.” Id. at 295. Once the record was closed, “Methodist withdrew its request for a hearing on and its objection to Baptist's CON application.” Id. With no more impediments to overcome, the Baptist CON was granted by the Department on September 30, 2022. Id. “On October 3, 2022, Methodist moved to reopen the Encompass hearing, or in the alternative, to supplement the record, to allow evidence regarding the newly issued Baptist CON. The hearing officer denied Methodist's motion.” Id. She noted the irrelevance of the Baptist CON, especially given the Department's rule that pending applications were not to be considered. Id. Ultimately, the hearing officer recommended granting the Encompass CON, and the state health officer agreed. Encompass was granted the CON on November 23, 2022.

¶7. On December 2, 2022, Methodist filed an appeal of the Department's grant of the Encompass CON in the Hinds County Chancery Court. The chancellor found that the hearing officer erred by failing to consider whether the Baptist CON was relevant. The chancellor reversed the grant of the CON and remanded the case to the Department for consideration of whether the Baptist CON was relevant. The matter came before this Court for the first time on appeal from the chancellor's reversal. Id. at 294. Encompass and the Department “argue[d] that the hearing officer did consider the relevance of the Baptist CON application and that the Baptist CON application and CON were not relevant to the Encompass proceedings[.]” Id. at 297. This Court agreed, finding that the hearing officer did consider whether the Baptist CON was relevant and found it to be irrelevant. Id. at 300. The decision of the chancellor was vacated, and the case was remanded “for a decision on the merits of Methodist's appeal.” Id.

¶8. On remand, the chancellor considered the Encompass CON under the applicable statutory standard of review. See Miss. Code Ann. § 41-7-201(2)(f) (Rev. 2023). The chancellor determined that “the decision of [the Department] was not based upon a single statistic or assertion; the decision was a thoughtful and reasoned response to a voluminous amount of evidence. The decision was supported by substantial evidence.” Therefore, the chancellor affirmed the Department's grant of Encompass's CON. Methodist now brings this appeal from the chancellor's judgment affirming the Department's grant of the Encompass CON.

ISSUES PRESENTED

¶9. Methodist presents four issues to be determined on appeal:

I. Whether the Encompass CON meets the applicable indigent care requirements.

II. Whether the Encompass CON unnecessarily duplicates CMR services resulting in an adverse effect on Methodist.

III. Whether the state health officer should have considered the impact of the Baptist CON.

IV. Whether the Department acted arbitrarily and capriciously when it applied the requirements of the SHP and CON review manual to the Encompass CON.

Additionally, Encompass asks this Court to remand the case to the chancery court to grant attorneys’ fees pursuant to Section 41-7-201(2)(f). The Department fully joins the positions proffered by Encompass.

STANDARD OF REVIEW

¶10. Methodist and Encompass dispute the standard of review. Section 41-7-201(2)(f) establishes the standard of review for a court reviewing the Department's grant or denial of a CON. It states:

The order shall not be vacated or set aside, either in whole or in part, except for errors of law, unless the court finds that the order of the State Department of Health is not supported by substantial evidence, is contrary to the manifest weight of the evidence, is in excess of the statutory authority or jurisdiction of the State Department of Health, or violates any vested constitutional rights of any party involved in the appeal.

§ 41-7-201(2)(f). While acknowledging that the standard of review for a CON is statutorily established, Methodist emphasizes this Court's decisions in King v. Mississippi Military Department, 245 So. 3d 404, 408 (Miss. 2018), and Mississippi Methodist Hospital & Rehabilitation Center, Inc. v. Mississippi Division of Medicaid, 319 So. 3d 1049, 1055 (Miss. 2021). In those cases, this Court abandoned its deference to agencies’ interpretations of statutes and agency-promulgated rules and regulations. King, 245 So. 3d at 408; Methodist, 319 So. 3d at 1055. Therefore, Methodist states that the applicable standard of review for the Department's actions is de novo.

¶11. This Court reviews issues of law—such as statutes and agency rules and regulations—de novo. King, 245 So. 3d at 408. However, “[t]he decision of the hearing officer and State health officer is afforded great deference upon judicial review by this Court, even though we review the decision of the chancellor.” Encompass, 383 So. 3d at 298 (internal quotation marks omitted) (quoting St. Dominic-Jackson Mem'l Hosp. v. Miss. State Dep't of Health, 728 So. 2d 81, 83 (Miss. 1998)). “This Court may not substitute its own judgment for that of the agency which rendered the decision, nor may we re-weigh the facts of the case.” Miss. State Dep't of Health v. Baptist Mem'l Hosp.-Desoto, Inc., 984 So. 2d 967, 975 (Miss. 2008) (internal quotation mark omitted) (quoting Pub. Emps.’ Ret. Sys. v. Dishmon, 797 So. 2d 888, 892 (Miss. 2001)). “This duty of deference derives from our realization that the everyday experience of the administrative agency gives it familiarity with the particularities and nuances of the problems committed to its care which no court can hope to replicate.” Id. (internal quotation marks omitted) (quoting Dunn v. Miss. State Dep't of Health, 708 So. 2d 67, 72 (Miss. 1998)). To simplify, this Court reviews issues of law de novo, while affording deference to the hearing officer's findings of fact. Methodist, 319 So. 3d at 1055; Encompass, 383 So. 3d at 298.

DISCUSSION

I. Whether the Encompass CON meets the applicable indigent care requirements.

¶12. Both the SHP and the CON review manual require newly proposed facilities to provide “reasonable” access to indigent care. Miss. Dep't of Health, Div. of Health Plan. & Res. Dev., FY2022 Miss. State Health Plan (SHP) § 102 (effective May 26, 2022), https://msdh.ms.gov/page/resources/16691.pdf; Miss. Dep't of Health, Div. of Health Plan. & Res. Dev., CON Review Manual § 8.1(6) (effective Nov. 11, 2023), https://msdh.ms.gov/page/resources/7167.pdf. The SHP considers “reasonable” indigent care to be “that which is comparable to the amount of such care offered by other providers of the requested service within the same, or proximate, geographic area.” SHP § 102.

¶13. The CON application submitted by Encompass included financial projections for three years. For each of those three years, Encompass's revenue projections included 1 percent charity care and 3 percent Medicaid. Methodist, on the other hand, submitted evidence that its current payor mix includes 5 percent charity care and 16 percent Medicaid. The proposed site for the new Encompass facility in Flowood is less than five miles away from Methodist in Jackson. Given the close geographic proximity, Methodist argued that Encompass failed to satisfy the reasonable indigent care requirement since Encompass's financial projections for charity care and Medicaid were lower than what Methodist offered the community.

¶14. Encompass argued that the financial projections were not meant to place a cap on the amount of indigent care that it was willing to provide. Encompass directed the hearing officer to its Financial Assistance Policy, which stated that Encompass would provide financial assistance to patients who were uninsured or underinsured provided that the patient met certain criteria as outlined in the policy. Furthermore, Encompass specifically stated in its CON application that it would “treat all appropriate patients in need of CMR services, regardless of ability to pay.”

¶15. In her Findings of Fact, Conclusions of Law and Recommendation, the hearing officer found that Encompass had satisfied the requirement to provide reasonable indigent care. Specifically, the hearing officer found that Encompass had provided evidence that: (1) most of its patients ranged from ages 74 to 76, meaning they would be eligible for Medicare coverage and, thus, not require charity care, (2) its financial assistance policy would be in effect, and (3) the testimony of Brad Kennedy, president of Encompass South Central Region, “affirmed that Encompass [would] accept all clinically appropriate patients in need of CMR services regardless of payor status or financial ability to pay.” Furthermore, the hearing officer found that Methodist had not presented credible evidence to contradict Encompass.

¶16. Methodist claims that the hearing officer and the state health officer's finding that Encompass met the indigent care requirement was arbitrary and capricious and requires reversal. Setting Methodist's indigent care percentage as the benchmark, Methodist argues that Encompass clearly failed to prove that it would offer a reasonable amount of indigent care. Furthermore, Methodist points to the fact that Encompass's projected 1 percent revenue from charity care is derived from “the rate historically served by Encompass hospitals in other markets[.]” Encompass counters Methodist's claim by reaffirming that its revenue projections are in no way a cap on indigent care. Encompass also redirects this Court's attention to its affirmation in the CON application as well as hearing testimony that Encompass would treat eligible patients regardless of their ability to pay.

¶17. Secondarily, reasonable indigent care access includes the requirement that the Department's approval of a CON should not “have a significant adverse effect on the ability of an existing facility or service to provide Medicaid/indigent care.” SHP § 102. Methodist argues that Encompass fails to meet this requirement as well. Because of the low percentage projections of Medicaid and charity care from Encompass, Methodist argues that it will be required to “shoulder the burden of providing care to the area's charity and Medicaid populations.” Methodist argues that given the close proximity of the proposed Encompass site, Methodist expects a reduction in admissions and particularly a reduction in admissions of Medicare and commercial insurance patients. This, Methodist claims, will negatively impact its ability to continue serving the indigent patient population because it would no longer be financially viable. Methodist's financial healthcare planning expert, Dan Sullivan, testified that he projected a financial loss for Methodist ranging between $3.3 to $5 million in the first year Encompass was operational and a $5.4 to $8.1 million loss by the third year.

¶18. Encompass presented evidence that, contrary to Methodist's claims of significant financial loss and lower patient admissions, “[r]eally what tends to happen when [Encompass] enter[s] new markets is ․ other inpatient rehabilitation facilities either stay stable from an [average daily census] standpoint or actually increase.”² “Encompass was able to explain and support this position by showing that Encompass Health provides CMR services nationwide in over 150 facilities and thus has seen and can document its impact on other providers.” Marty Chafin, Encompass's health planning expert who prepared the CON application specifically testified that Methodist would not be adversely impacted and provided examples of markets that Encompass had entered where occupancy numbers for other CMR providers increased. Encompass also presented evidence that Methodist generally serves a different average age population than Encompass. “[Methodist]’s average patient age is 60, while Encompass's is 76.” In that sense, Encompass and Methodist would not be competing for the same patients, thus Encompass would not negatively impact Methodist's ability to provide indigent care.

¶19. The hearing officer based her finding that Encompass had met the indigent care requirements on substantial evidence. Given the deferential standard of review afforded to a hearing officer's findings of fact, neither the hearing officer, the state health officer, nor the chancery court acted arbitrarily and capriciously by finding that Encompass met the indigent care requirements set forth by the SHP and the CON review manual.

II. Whether the Encompass CON unnecessarily duplicates CMR services resulting in an adverse effect on Methodist.

¶20. The SHP states that a general CON policy is “to prevent unnecessary duplication of health resources[.]” SHP § 102. Central to this policy is the planning or service area for CMR services. Other types of healthcare services that the SHP regulates split the state into service areas and evaluate CON applications and other needs based on the applicable service area—typically consisting of a few counties grouped together. See generally SHP Map 5-1.The service area for CMR services is the entire state.³ SHP § 601 (“The state as a whole serves as a single service area when determining the need for [CMR] beds/services.”). The SHP identified a statewide need for “seven (7) Level I beds and ninety-four (94) additional Level II CMR beds.” Id. § 601.

¶21. According to the SHP, “[w]hen reviewing CON applications, [the Department] shall consider the utilization of existing services and the presence of valid CONs for services.” SHP § 603.01(5). Additionally, the CON review manual states that

The probable effect of the proposed facility or services on existing facilities providing similar services to those proposed will be considered. When the service area of the proposed facility or service overlaps the service area of an existing facility or service, then the effect on the existing facility or service may be considered.

CON Review Manual § 8.1(5)(d).

¶22. The SHP identified a need for additional CMR beds in the state. SHP § 601. By identifying a need for additional CMR beds, an implication arises that a newly proposed facility or service that applies to meet that need would not be unnecessarily duplicative of existing similar services. Encompass applied to establish a new facility that would operate a total of fifty CMR beds, which is less than the need identified by the SHP. SHP § 601. Methodist currently operates eighty CMR beds at its facility in Jackson.⁴ The SHP placed Methodist's occupancy rate at 66.52 percent for fiscal year 2020. SHP Table 6-1. A 2020 report generated by Lisa Werner, Methodist's expert witness in inpatient rehabilitation insurance reimbursement and compliance, “acknowledged that Methodist accept[ed] about [35] percent of referred patients,” whereas nationally, CMR facilities averaged between a 45 and 50 percent acceptance rate of referred patients.

¶23. The hearing officer found that this evidence—in addition to a multitude of other evidence presented by Encompass—tended to show an unmet need in the area for additional CMR services that could not be adequately satisfied by Methodist. Other evidence that the hearing officer relied upon included: (1) testimony from Chafin, Encompass's CON expert, that the Jackson metro area—including Hinds, Rankin, and Madison Counties—was the largest area in terms of population and had the largest amount of acute care hospitals in the state and that Encompass received 90 percent of its patients from acute care hospitals; (2) evidence that Mississippi is the “belt buckle” of the “stroke belt” and that strokes constitute the “largest single diagnosis for CMR services” at Encompass CMR facilities; and (3) testimony from Chafin that Mississippi has a lower Medicare conversion rate ⁵ than other states when considering that the “largest group that uses CMR services nationally is the Medicare population.”

¶24. On appeal, Methodist argues that the Department failed to consider Methodist's own existing CMR services and the impact granting Encompass's CON application would have on Methodist as well as skilled nursing facilities (SNF). Methodist also states that Encompass failed to show an actual need for CMR services in the Jackson area. According to Methodist, SNFs in the area would suffer from the establishment of Encompass in Flowood. Notably, however, SNFs do not provide the same level of intensive rehabilitative care that CMR facilities are required to provide.⁶ Given the difference between the level of services offered at CMR facilities and SNFs, the hearing officer found that “there w[ould] not be any significant adverse impact to other types of post-acute care providers in the area from Encompass's proposed project.” Furthermore, because the service area for CMR services is the entire state, Encompass was not required to prove that the Jackson area had an actual need for additional CMR services. That need was established by the SHP. Encompass did offer ample evidence that its services would not be unnecessarily duplicative by showing that there was an unmet need in the Jackson metro area. The hearing officer based her findings on substantial credible evidence that the Encompass CON would not unnecessarily duplicate existing services. Therefore, we affirm the chancery court's judgment on this issue.

III. Whether the state health officer should have considered the impact of the Baptist CON.

¶25. This case has been before this court once before on appeal from the chancellor's order reversing the Department's grant of the CON and remanding the case to consider the relevance of the Baptist CON. Encompass, 383 So. 3d at 294. This Court reversed the chancellor's decision, finding that the hearing officer had considered the relevance of the Baptist CON and determined that it was irrelevant. Id. at 299-300. This Court also held that the hearing officer did not err by refusing to reopen the record of the Encompass hearing to allow evidence of the granted Baptist CON. Id. This circumstance, the Court noted, was entirely of Methodist's own making. Id. at 300.

Methodist caused this occurrence. Well after the Encompass hearing was closed to evidence, to which Methodist did not object, Methodist unilaterally withdrew its objection to the Baptist CON application, which caused the Baptist CON application to be approved. Then, Methodist immediately moved to reopen the Encompass record to introduce the newly granted Baptist CON. The granted Baptist CON was not newly discovered evidence; it was evidence that changed solely due to Methodist's own actions. It is difficult to credit Methodist's outrage when it knowingly caused this situation.

Id.

¶26. In the present case, Methodist argues that the state health officer acted arbitrarily and capriciously when it granted the Encompass CON with the personal knowledge that the Baptist CON had also been granted. By granting the Baptist CON and not allowing evidence of it into the record for the Encompass CON application, Methodist states that “the [state health officer]’s conclusion cannot be based on ‘substantial evidence’ ” because the Encompass CON application was allowed to stand unaltered even though the utilization and financial projections in the application would have changed.

¶27. Encompass argues that Methodist is simply attempting to relitigate the issue of whether the impact of the Baptist CON should have been considered. This Court has already definitively ruled on this issue. Methodist represents its claim as new by arguing that it

is not challenging whether the Administrative Hearing Officer should have reopened the record—a procedural issue this Court has already resolved. Rather, Methodist challenges whether the [state health officer] could issue final approval of Encompass's project without accounting for his two-month prior approval of Baptist's project and its material impact on need and duplication.

This Court did not limit its prior ruling to the hearing officer's refusal to reopen the record and admit evidence of the granted Baptist CON. Instead, this Court concluded that “[t]he chancery court erred in its determination that the [Department] did not consider the relevance of the Baptist CON application, and the [Department] did not err in its decision on relevance or its decision not to reopen the closed Encompass hearing.” Id.

¶28. Whether or not the Baptist CON should have been considered has been answered in the negative by this Court. Id.⁷ Methodist may not raise this claim a second time under the guise of separating out the actions of the hearing officer from those of the state health officer—both of whom fall under the umbrella of the Department in this Court's prior ruling. “If a second appeal involves the same issues and same facts as a prior appeal, the law established in the prior appeal ordinarily applies under the law of the case doctrine.” Lee v. Thompson, 167 So. 3d 170, 177 (Miss. 2014) (citing J.K. v. R.K., 30 So. 3d 290, 296 (Miss. 2009)). The facts have remained constant from the first appeal to this Court until the current appeal and although Methodist has rephrased the issue, it also remains the same. Therefore, we decline to readdress this issue.

IV. Whether the Department acted arbitrarily and capriciously when it applied the requirements of the SHP and CON review manual to the Encompass CON.

¶29. In addition to Methodist's previously discussed grievances, Methodist also argues that “the Encompass application failed to meet other essential requirements set forth in the [SHP] and the CON Manual.” Specifically, Methodist states that the Encompass CON: (1) does not improve the health of Mississippians or their access to care; (2) does not prevent the unnecessary duplication of resources; (3) does not contain costs; (4) failed to consider the availability of alternatives to the proposed Flowood location; (5) will not adequately serve low income persons and minorities; and (6) lacks adequate health personnel to support the proposed project. Methodist mostly repeats its arguments for indigent care and unnecessary duplication of services. For discussion of the second and fifth concerns, we direct the reader back to the analysis above in Sections I and II.

A. Improved Health and Access to Care

¶30. Methodist argues that the Encompass CON does not serve the general CON policies to improve the health of Mississippians and to increase access to health services. SHP § 102 Here, Methodist repeats its claims that the establishment of Encompass in Flowood will result in the reduction of admissions at Methodist “without meaningfully improving statewide access.” Methodist also repeats its argument that Encompass fails to provide sufficient indigent care and is duplicative of Methodist's own CMR services and, therefore, “it neither furthers the [SHP]’s aim of improving health outcomes nor expands care to underserved populations.” Given the evidence accepted by the hearing officer, the state health officer and the chancery court that an unmet need existed in the Jackson area, that Mississippi is the “belt buckle” of the “stroke belt,” that Methodist was only accepting 35 percent of the patients referred to it, we find counterintuitive accepting Methodist's position that the establishment of Encompass would not improve the health of Mississippians and would decrease their access to health services. Therefore, we agree with the chancery court's decision affirming that Encompass's proposal meets these general CON policies.

B. Cost Containment

¶31. Another general CON policy stated in the SHP is “[t]o provide cost containment.” SHP § 102. Methodist argues that the Encompass project will not contain costs and will instead increase “overall healthcare spending, particularly for the state Medicaid program[.]” Encompass points to the plethora of evidence provided at the hearing that it would contain costs. The hearing officer found in her recommendation that Encompass had substantially complied with the policy of cost containment, noting that

Encompass's witness Kennedy testified that Encompass Health (the parent company) is in a “leading position in cost effectiveness” nationally with regard to CMR services. Further, there was testimony that Encompass facilities cost the Medicare program less nationally than other providers because Encompass is paid less per Medicare patient than the industry average. Encompass also presented credible evidence showing that, because of its size and nationwide presence, it saves money through simple economics of scale. Finally, it was testified that increasing access to CMR services will result in patients getting needed care sooner, which arguably results in less risk of readmission, and thus indirectly increases cost containment. I find this testimony to be credible and reasonable.

(Citations omitted.) Given the deferential standard afforded to the hearing officer's findings of fact, we find that the chancery court did not err by affirming and finding that the proposed Encompass project substantially complies with the SHP policy of cost containment.

C. Consideration of Alternatives

¶32. The CON review manual requires the Department to review CON applications based on several different general considerations. One of these stated considerations is the availability of alternatives. This consideration asks the Department to consider “[t]he availability of less costly or more effective alternative methods of providing the service to be offered, expanded or relocated.” CON Review Manual § 8.1(3). Methodist argues that “Encompass never evaluated any other location than Flowood.” Encompass, however, offered evidence that it considered either maintaining the status quo or establishing a facility in Rankin County, given the population growth and the low CMR utilization rate in Rankin County particularly. Chafin, Encompass's CON expert witness, testified extensively about why Rankin County, and specifically Flowood, were chosen as the location of the proposed Encompass facility. The hearing officer found that “Encompass gave appropriate consideration to available alternatives, that the proposed Project is an appropriate option to achieve the goals of the SHP” and that Encompass had therefore complied with the general consideration to consider available alternatives. Again, given the deference offered to the hearing officer's findings of facts, we affirm the chancery court's decision on this issue.

D. Adequacy of Health Personnel

¶33. Methodist's final argument is that Encompass has not demonstrated compliance with the CON review manual's general consideration number nine: the availability of resources, particularly with regard to staff. CON Review Manual § 8.1(9). Methodist argues that widespread staffing shortages evidence that Encompass will not be able to procure sufficient staff for its proposed facility. Encompass did present evidence that it would be able to staff its new facility adequately. Kennedy testified that Encompass recruits its staff nationally and even internationally. He also testified that Encompass focused heavily on retention, encouraging its nurses to receive additional certification in rehabilitative nursing. The hearing officer found Encompass's evidence regarding this general consideration to be largely undisputed and found that Encompass had complied with the general consideration. We affirm on this issue.

V. Whether Encompass is entitled to attorneys’ fees.

¶34. Following the chancery court's judgment affirming the Department's grant of the Encompass CON on remand, Encompass made a motion for an award of costs, fees, reasonable expenses and attorneys’ fees. The chancery court did not rule on the motion prior to Methodist's appeal to this Court. Encompass now asks this Court to remand this case to the chancery court for a determination of attorneys’ fees. Encompass also asks this Court to clarify whether it is entitled to attorneys’ fees from the appeals not only to the chancery court, but to this Court as well. Section 41-7-201(2)(f) states in pertinent part: “[t]he court, as part of the final order, shall make an award of costs, fees, reasonable expenses and attorney's fees incurred in favor of the appellee payable by the appellant(s) should the court affirm the order of the State Department of Health.”

¶35. Encompass maintains that Section 41-7-201(2)(f)’s reference to “[t]he court” does not limit the recovery of fees to only those incurred in the appeal to the chancery court. Instead, “[t]he court” must refer to both the chancery court and this Court; otherwise, parties would be unfairly rewarded by not having to pay fees for meritless appeals to this Court.

¶36. Methodist disputes this interpretation of Section 41-7-201(2)(f). It argues that the “larger statutory structure” of Section 41-7-201 makes clear that “[t]he court” in Section 41-7-201(2)(f) refers only to the chancery court and not to this Court. Specifically, subsections (2)(b), (2)(c), (2)(d), and (2)(e) of Section 41-7-201 all outline the process of an appeal to the chancery court from a Department order granting or denying a CON. Then, subsection (2)(f) dictates how the court must review the appeal and must award fees in the event that the court affirms the Department's order. On the other hand, subsection (2)(g) specifically refers to this Court, stating that “[a]ppeals in accordance with law may be had to the Supreme Court of Mississippi from any final judgment of the chancery court.” Miss. Code Ann. § 41-7-201(2)(g) (Rev. 2023). Therefore, Methodist states that Section 41-7-201(2)(f) only mandates the award of attorney fees from successful appeals to the chancery court and does not extend that mandate to appeals to this Court.

¶37. This Court agrees with Methodist's interpretation of Section 41-7-201(2)(f). In addition to the evidence that the plain language of the statute provides, we note that in order for this Court to review a final decision, that decision must come from “a court clothed with judicial authority and acting in a judicial capacity. The tribunal from which an appeal lies need not be called a ‘court’; but it must be one having the attributes of a court—a tribunal where justice is judicially administered.” Dialysis Sols., LLC v. Miss. State Dep't of Health, 96 So. 3d 713, 719 (Miss. 2012) (quoting Ill. Cent. R.R. Co. v. Dodd, 105 Miss. 23, 61 So. 743, 743 (1913)). This Court has held that the Department “lacks the indicia to be considered ‘a tribunal of the character from which the Legislature is authorized to grant appeals direct to this [C]ourt.’ ” Id. (quoting Dodd, 61 So. at 745). This Court reviews the decision of the chancery court. This Court does not directly review the order of the Department granting or denying a CON because the Department lacks the attributes of a court. Therefore, Section 41-7-201(2)(f)’s reference to “[t]he court” must only mean the chancery court since this Court does not directly review orders of the Department.⁸

¶38. Methodist further relies on City of Cleveland v. Mid-South Associates, LLC, 94 So. 3d 1137, 1139-40 (Miss. Ct. App. 2011), vacated on other grounds by City of Cleveland v. Mid-South Associates, LLC, 94 So. 3d 1049, 1051 (Miss. 2012), for its argument that Encompass is not entitled to attorneys’ fees at all. In Cleveland, the Court of Appeals took the opportunity to address Section 41-7-201(2)(f) and provide insight as to when attorneys’ fees in connection with an appeal of a CON decision are mandatorily awarded. Cleveland, 94 So. 3d at 1139-40. The Court of Appeals held that Section 41-7-201(2)(f) only mandates the award of attorneys’ fees when the chancery court affirms the Department's CON decision. Id. at 1139. The mandatory attorneys’ fees provision did not apply “when ․ the chancellor reversed the ․ Department's decision and the chancellor was then reversed on appeal.” Id.

¶39. Cleveland differs from the current case in an important manner. In Cleveland, the chancery court reversed the Department's decision denying a CON. Id. at 1138. That decision was appealed, and the Court of Appeals reversed the decision of the chancery court and reinstated the Department's decision to deny the CON. Id. When the Court of Appeals reversed the chancery court's decision, it rendered the “judgment to reinstate the [Department]’s decision to deny the CON.” Miss. State Dep't Of Health v. Mid-S. Assocs., LLC, 25 So. 3d 358, 364 (Miss. Ct. App. 2009). The case was not remanded to the chancery court, so the chancery court never affirmed the decision of the Department. The chancery court only ever reversed the Department's decision. In the present case, however, the chancellor did affirm the Department's order when the case was remanded following the first appeal to this Court. Because the chancery court in the present case did actually affirm the Department's order, Encompass is entitled to attorneys’ fees from the chancery court appeal pursuant to Section 41-7-201(2)(f). Therefore, we remand the case to the chancery court for a determination of the amount of attorneys’ fees to which Encompass is entitled from the appeal to the chancery court under Section 41-7-201(2)(f).

CONCLUSION

¶40. The decision of the chancery court is affirmed. The hearing officer based her findings of fact on substantial evidence and applied the correct legal analysis to her consideration of the Encompass CON application. We remand this case to the chancery court to determine the amount of attorneys’ fees to which Encompass is entitled under Section 41-7-201(2)(f).

¶41. AFFIRMED AND REMANDED.

FOOTNOTES

1.   Mississippi Code Section 41-7-173(a)(iv) (Supp. 2024) (internal quotation marks omitted) defines an “affected person” to include “health care facilities and HMOs which have, prior to receipt of the application under review, formally indicated an intention to provide service similar to that of the proposal being considered at a future date[.]”

2.   This testimony was offered by Brad Kennedy, president of Encompass South Central Region.

3.   Methodist seems to take exception to the statewide service area established in the SHP for CMR services. We note that whether a statewide service area for CMR services is prudent is not a proper complaint for this Court. The Legislature is responsible for establishing the CON program and empowering the Department to create, review and revise the SHP. Miss. Code Ann. §§ 41-7-185 to -187 (Rev. 2023). Therefore, the proper avenue for challenging the service area would be via Legislative action or revision of the SHP by the Department.

4.   At the hearing, Methodist proffered testimony that it actually operated ninety-three CMR beds rather than the eighty CMR beds recognized by the Department in the SHP. The hearing officer declined to consider evidence of additional CMR beds, finding that Methodist did not have a valid CON for the additional thirteen beds that it claimed it was operating as CMR beds. If the operation of ninety-three—rather than eighty—CMR beds was accepted as true, then Methodist's occupancy rate would be even lower.

5.   “The Medicare Conversion Rate is the percentage of total Medicare patients discharged from hospitals directly to CMR facilities.”

6.   CMR facilities must provide its patients with at least three hours of therapy per day. This includes occupational, speech and physical therapy. CMR facilities must have twenty-four-hour-a-day RN oversight. Additionally, CMR patients must see a physician a minimum of three times per week. SNFs, on the other hand, only require physician visits every thirty days, no minimum rehabilitation hour requirement, and only eight-hour-a-day RN oversight.

7.   As an aside, even after the Department granted both CONs to Encompass and Baptist, there still remained an unmet need for Level II CMR beds. The SHP identified a need for ninety-four Level II CMR beds. SHP § 603.04. Combined, Encompass and Baptist applied for eighty-three Level II CMR beds. This leaves eleven Level II CMR beds to meet the need specified by the SHP.

8.   That is not to say that Encompass may not be awarded attorneys’ fees from the appeals to this Court. Merely, Section 41-7-201(2)(f) is not the vehicle for the award of those attorneys’ fees. In Latham v. Latham, 261 So. 3d 1110, 1115 (Miss. 2019), this Court held that in order to seek appellate attorneys’ fees from an appeal to this Court, Mississippi Rule of Appellate Procedure 27(a) requires the party to file a motion in this Court. The motion must be “supported by affidavits and time record that establish the actual fees expended on appeal.” Id. (internal quotation mark omitted) (quoting Hatfield v. Deer Haven Homeowners Ass'n, Inc., 234 So. 3d 1269, 1277 (Miss. 2017)).

CHAMBERLIN, JUSTICE, FOR THE COURT:

RANDOLPH, C.J., KING AND COLEMAN, P.JJ., MAXWELL, ISHEE, GRIFFIS, SULLIVAN AND BRANNING, JJ., CONCUR.