CHICAGO—A July 12 ruling by the Illinois Appellate Court requires the Illinois Health Facilities and Services Review Board to explain with more than "boilerplate verbiage" how they arrive at their decisions to approve healthcare real estate projects. And legal observers say this should force all similar bodies to do likewise, perhaps ending the uncertainty commercial real estate developers sometimes encounter when dealing with state administrative boards.

“The logic of this decision can be applied anywhere,” says Mark J. Silberman, the Chicago-based attorney with Duane Morris LLP who argued the case before the Fourth District court in Sangamon County on May 22. “It's not tailored to just the health facilities board.”

Medina Nursing Center, Inc., located in Durand, IL, and several other providers of long-term nursing care in the rural areas around Rockford, had asked the nine-member board to deny an application by Pecatonia Pavilion LLC to build a similar 24-bed facility in nearby Pecatonia, claiming it would duplicate their services and force up their per-patient prices. Staff from the Illinois Department of Public Health studied the issue and reported that while the proposed facility met many of the criteria called for in the health board's regulations, it failed to meet four, including the avoidance of unnecessary duplication of facilities.

But at a board meeting on March 21, 2011, its members, with little public discussion, quickly approved Pecatonia's application. And in a follow-up letter, board members merely stated that “in arriving at a decision” they “considered the findings contained in the State Agency Report, the application material, and any testimony made before the State Board.”

Medina and the other plaintiffs wanted a judicial review of this decision, but the circuit court turned them down. The plaintiffs appealed, and were rewarded when the three appellate judges complained that the board's “robotic declaration . . . is worthless for purposes of judicial review.”

“The better course is to have the Board issue a reasoned opinion so as to make possible a meaningful judicial review,” they stated. “We provide reasons for our decisions, a salutary practice that not only helps the public to have confidence in what we do but also guards against arbitrariness.”

As a former state official and general counsel of the health facilities board, Silberman strongly supports its mission to bring some rationality to the state's healthcare system. Furthermore, the Pecatonia project could go forward, especially if the board provides a compelling explanation for their original decision.

“We just need some way to discern why the board did what it did,” he says. “If you look at the history of the board, they have sometimes made decisions for the wrong reasons.”

Public confidence in the health board was undermined when Tony Rezko, a fundraiser for former Gov. Rod Blagojevich, was indicted by federal officials in 2006, for, among many other things, plotting with former board member Stuart Levine to secure a $1 million kickback from a contractor planning to build a hospital facility.

The state has decided not to appeal the ruling to the Illinois Supreme Court, “so this case is now law,” Silberman says. “The government being able to make decisions without explaining them has come to an end.”

He points out that other judges have already begun to cite the case. In July, just days after the Pecatonia decision was released, Will County Judge Bobbi N. Petrungaro ruled that the board must explain why they first denied, and then approved, Centegra Health System's plan for a new hospital in the northwest suburban village of Huntley. As in the Pecatonia case, several local healthcare providers had opposed Centegra's proposal and IDPH staff issued a report stating that it failed to meet several of the health board's criteria.

The judge noted that “the Board had no public discussion and provided no rationale as to why it reversed its previous denials.” Calling the two cases “almost identical,” Petrungaro wrote that the board's “decision contains no findings of fact, no adoption of the [staff report], no indications as to which criteria and standards were met or were not met, no indication as to why the Board must have disagreed with the [staff report] and no conclusions by the Board. As such, like the above recent case, this case is remanded to the Board for further explanation.”

Silberman calls these decisions “polite reminders” to the state's administrative bodies to avoid uncertainty. And in addition to increasing public confidence in government decisions, he believes the new rules may also help developers avoid litigation costs. “Uncertainty always provides a toehold for a good lawyer to make an argument." But if he has a clear explanation that could withstand judicial review "I'm not going to encourage a client to pursue litigation."

Instant Insights /

Judges to State Boards: Explain Yourselves

Related Stories

Recommended For You