THE ST. LUKE HOSPITALS, INC. VS. COMMONWEALTH OF KENTUCKY , ET AL.
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RENDERED: MAY 9, 2008; 2:00 P.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001092-MR
THE ST. LUKE HOSPITALS, INC.
v.
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE THOMAS D. WINGATE, JUDGE
ACTION NO. 05-CI-00367
COMMONWEALTH OF KENTUCKY, CABINET for
HEALTH and FAMILY SERVICES, OFFICE OF
CERTIFICATE OF NEED;
JAMES W. HOLSINGER, M.D., SECRETARY FOR HEALTH
AND FAMILY SERVICES, in his official capacity;
ST. ELIZABETH MEDICAL CENTER, INC.;
T.J. SAMSON COMMUNITY HOSPITAL; AND
EPHRAIM MCDOWELL REGIONAL MEDICAL CENTER, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; DIXON, JUDGE; KNOPF,1 SENIOR JUDGE.
DIXON, JUDGE: The St. Luke Hospitals, Inc. (“St. Luke”) appeal from a Franklin Circuit
Court order of summary judgment dismissing St. Luke’s declaratory judgment action.
We affirm.
Senior Judge William L. Knopf, sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
1
On June 4, 2004, the Cabinet for Health and Family Services (“Cabinet”)
issued the 2004-2006 State Health Plan pursuant to Kentucky Revised Statutes (KRS)
194A.010. The State Health Plan established criteria for a pilot project to study the risks
and benefits of allowing angioplasty at hospitals without immediate access to an openheart surgery facility. The scope of the project was limited to one hospital in eastern
Kentucky and one hospital in western Kentucky and required the hospitals to be located
thirty minutes from an on-site open-heart surgery center.
St. Luke, which operates two hospitals in northern Kentucky, did not
participate in the administrative hearings or application process for the pilot project.
Instead, after the pilot hospitals were selected, St. Luke filed a declaratory judgment
action in Franklin Circuit Court against the Cabinet. St. Luke claimed that the twohospital limitation and the thirty-minute requirement were unconstitutional.
The circuit court allowed three other hospitals to intervene as defendants.
T.J. Samson Community Hospital and Ephraim McDowell Regional Medical Center are
the two hospitals selected to participate in the project. St. Elizabeth Medical Center is
the only northern Kentucky hospital with an open-heart surgery program.
Following discovery and oral argument, the circuit court granted summary
judgment in favor of the Cabinet and intervening defendants (hereinafter, collectively,
“Cabinet”). This appeal followed.
As a preliminary matter, the Cabinet contends review is foreclosed
because St. Luke failed to exhaust its administrative remedies and, alternatively, lacks
standing to seek judicial review. We disagree.
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I. Exhaustion of Administrative Remedies
It is undisputed that St. Luke did not tender an application and the
$2500.00 filing fee to the Cabinet for consideration. Thus, the Cabinet contends St.
Luke did not pursue and exhaust its administrative remedies prior to seeking judicial
review.
Exhaustion of remedies is a well-settled principle of administrative law.
KRS 13B.140(2); Popplewell's Alligator Dock No. 1, Inc. v. Revenue Cabinet, 133
S.W.3d 456, 471 (Ky. 2004). However, an exception to the exhaustion doctrine exists.
Exhaustion of administrative remedies is not necessary
when attacking the constitutionality of a statute or a
regulation as void on its face. This is because an
administrative agency cannot decide constitutional issues.
Thus, to raise the facial constitutional validity of a statute or
regulation at the administrative level would be an exercise in
futility.
Commonwealth v. DLX, Inc., 42 S.W.3d 624, 626 (Ky. 2001) (internal citations omitted).
Despite the Cabinet’s argument to the contrary, it is apparent that St. Luke
challenges the facial constitutionality of the regulation. Consequently, it would have
been futile for St. Luke to participate in the administrative process.
II. Standing
Next, the Cabinet contends that St. Luke lacks standing to seek judicial
review. Again, we disagree.
To establish standing, St. Luke must “allege ‘a personal stake in the
outcome of the controversy’ to warrant . . . jurisdiction. Additionally, there must have
been shown a causal relationship between [St. Luke]'s alleged injury and the activity
about which it complains.” Associated Industries of Kentucky v. Commonwealth, 912
S.W.2d 947, 951 (Ky. 1995) quoting Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197, 45
L. Ed. 2d 343 (1975).
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The Cabinet argues that St. Luke suffered no injury because it did not
participate in the administrative process. The Cabinet primarily relies on Steel v. Meek,
312 Ky. 87, 89, 226 S.W.2d 542, 543 (Ky. 1950) for the proposition that the movant
must be “adversely affected by the alleged discriminatory features of the law[.]”
We agree that Steel is on point. However, we are persuaded that St. Luke
was adversely affected by the regulation. It is evident that the thirty-minute requirement
precluded St. Luke from participating in the project.
The Supreme Court of the United States has noted:
When the government erects a barrier that makes it more
difficult for members of one group to obtain a benefit than it
is for members of another group, a member of the former
group seeking to challenge the barrier need not allege that
he would have obtained the benefit but for the barrier in
order to establish standing. The “injury in fact” in an equal
protection case of this variety is the denial of equal treatment
resulting from the imposition of the barrier, not the ultimate
inability to obtain the benefit.
Northeastern Florida Chapter of Associated General Contractors of America v. City of
Jacksonville, Florida, 508 U.S. 656, 666, 113 S. Ct. 2297, 2303, 124 L. Ed. 2d 586
(1993).
Under the facts in the case at bar, the selection criteria required eligible
hospitals to be at least thirty minutes from an open-heart surgery center. Due to St.
Luke’s proximity to St. Elizabeth, it was ineligible to apply for the project. Consequently,
St. Luke has standing to challenge the selection criteria because it was precluded from
participating in the application process.
III. Special and Local Legislation
St. Luke first contends the selection criteria constitute special or local
legislation in violation of §59 and §60 of the Kentucky Constitution.
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“The primary purpose of Kentucky Constitution, Section 59 is to prevent
special privileges, favoritism, and discrimination, and to insure equality under the law.”
Kentucky Harlan Coal Co. v. Holmes, 872 S.W.2d 446, 452 (Ky. 1994). “[I]n order for a
law to be general in its constitutional sense it must meet the following requirements: (1)
[i]t must apply equally to all in a class, and (2) there must be distinctive and natural
reasons inducing and supporting the classification.” Schoo v. Rose, 270 S.W.2d 940,
941 (Ky. 1954).
St. Luke argues the project criteria improperly subdivide the class of acute
care hospitals based on geographic location and discriminate against hospitals located
in urban areas. We disagree.
The regulation restricts the class to acute care hospitals without access to
an open-heart surgery center. Now underway, the project makes primary angioplasty
available at two community hospitals where the procedure was previously more than
thirty minutes away. The Cabinet’s goal is to evaluate the risks associated with
performing an angioplasty procedure to stabilize a patient, then transporting the patient
to an open-heart surgery center. While St. Luke argues that the project favors rural
areas, we must point out that urban residents, unlike rural residents, already have
immediate access to comprehensive cardiac care centers. Furthermore, despite St.
Luke’s argument to the contrary, both the two-hospital limitation and thirty-minute
requirement are reasonable in light of the inherent risks of the project, including
increased patient mortality.
“Where the classification enacted by the legislature in the statute has a
reasonable basis, such law does not constitute special or local legislation within the
prohibition of Section 59 of the Kentucky Constitution nor does it deny the equal
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protection guaranteed by the United States Constitution.” Kentucky Harlan Coal Co.,
872 S.W.2d at 452.
We conclude the selection criteria promulgated by the Cabinet do not
constitute special or local legislation, as the classification is “reasonable, natural, and
consistent with the legitimate purpose of the government.” Id., quoting Commonwealth
v. Hillside Coal Co., 109 Ky. 47, 58 S.W. 441 (1900).
IV. Equal Protection
St. Luke contends the regulation arbitrarily discriminates against urban
hospitals in violation of § 2 and § 3 of the Kentucky Constitution.
“A statute involving the regulation of economic matters or matters of social
welfare comports with both due process and equal protection requirements if it is
rationally related to a legitimate state objective.” Wynn v. Ibold, Inc., 969 S.W.2d 695,
696 (Ky. 1998).
St. Luke argues that the methodology of the project is flawed, and the
project is contrary to the safety concerns embodied in the State Health Plan. Despite
St. Luke’s argument, we are not persuaded that the regulation is unconstitutional.
We are mindful that, “as a practical matter, nearly all legislation
differentiates in some manner between different classes of persons and the Equal
Protection Clause does not forbid such classification per se.” Natural Resources and
Environmental Protection Cabinet v. Kentec Coal Co., Inc., 177 S.W.3d 718, 725 (Ky.
2005).
In the case at bar, the record shows that the Cabinet held a lengthy review
process and considered numerous factors when drafting the regulation. It is clear the
Cabinet limited participation in the project to minimize exposure to the inherent risks.
Likewise, in the interest of public health, it is reasonable for the Cabinet to study the
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feasibility of expanding emergency cardiac services to rural areas. We conclude the
regulation survives rational basis scrutiny.
For the reasons stated herein, the Franklin Circuit Court’s order of
summary judgment is affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT:
Lisa English Hinkle
Christopher J. Shaughnessy
McBrayer, McGinnis, Leslie &
Kirkland, PLLC
Lexington, Kentucky
BRIEF FOR APPELLEES
ST. ELIZABETH MEDICAL CENTER,
T.J. SAMSON COMMUNITY HOSPITAL,
EPHRAIM MCDOWELL REGIONAL
MEDICAL CENTER:
Michael D. Baker
Lori J. Eisele
Wyatt, Tarrant & Combs, LLP
Lexington, Kentucky
Mark D. Guilfoyle
Mathew R. Klein
Renee’ L. Alsip
Deters, Benzinger & Lavelle, P.S.C.
Crestview Hills, Kentucky
BRIEF FOR APPELLEES
CABINET FOR HEALTH AND FAMILY
SERVICES AND
JAMES W. HOLSINGER, M.D.:
Ann Truitt Hunsaker
Cabinet for Health and Family Services
Frankfort, Kentucky
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