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Scott v. Ashland Healthcare Center3/16/2000
In this wrongful death case against a nursing home, we are asked to decide if the holder of the certificate of need and the license to operate the facility may be held liable even if the facility is leased to and operated by another entity. The Circuit Court of Cheatham County granted summary judgment to the holder of the certificate of need and the license to operate. We affirm.
I.
The administrator of the estate of Flois Cary Snoddy filed suit for his wrongful death alleging that he died on July 6, 1994 as a result of the treatment he received in the Oakmont Care Center in Ashland City. The complaint contained counts of common law negligence and the violation of certain state statutes and federal regulations. Among the defendants were Stephen Creekmore, Ashland Healthcare, Inc., and Medical Holdings, Ltd.
Stephen Creekmore owns Medical Holdings, Ltd., which, in turn, is the sole shareholder of Ashland Health Care, Inc., a corporation that built the Oakmont Care Center in Ashland City. Neither Creekmore, Ashland Healthcare, nor Medical Holdings are in the business of operating nursing homes.
In order to build a health care facility, the builder must first obtain a "Certificate of Need" (hereafter CON). Tenn. Code Ann. § 68-11-106. In 1988 Ashland Healthcare retained a private attorney to obtain the CON for the Ashland City facility. The application was inadvertently filed in the name of Medical Holdings and issued in that name on November 21, 1988. The attorney discovered the mistake and the CON was reissued to Ashland Healthcare on September 22, 1993, as the construction neared completion.
A separate license is required to operate a health care facility. Tenn. Code Ann. § 68-11-204. Since Ashland Healthcare was not in the business of operating nursing homes, it leased the facility to Monarch Nursing Homes, Inc., an unrelated Missouri Corporation, on October 1, 1993.
Monarch applied for an operator's license on July 6, 1993, naming the institution Oakmont Care Center and showing Monarch Nursing Homes, Inc. as the owner of the business. The application was signed by John M. Pugh, a Monarch employee designated as the administrator of the facility. The licensing board rejected that application because the applicant was not the same as the holder of the CON. On September 28, 1993, another Monarch employee refiled the application in the name of Ashland Healthcare, Inc., D/B/A Oakmont Care Center. The application contained extensive accurate information about Ashland Healthcare, even showing the parent company as Medical Holdings, Ltd. There is a disputed question of fact, however, about whether Ashland Healthcare, Medical Holdings, and/or Mr. Creekmore knew about and acquiesced in the use of Ashland Healthcare's name to obtain the license. On October 1, 1993, the Department of Health issued a conditional six month license in the name of Ashland Healthcare, Inc., D/B/A Oakmont Care Center.
A new license, therefore, had to be obtained before the six month period expired. Despite the fact that the license could have been obtained by Monarch by filing a change of ownership form, a new administrator of the Oakmont Care Center filed another application in the name of Ashland Healthcare, Inc., D/B/A Oakmont Care Center, on March 6, 1994. This application, however, contained the additional information that the facility was being operated by Monarch. The Department reissued the permit to Ashland Healthcare, Inc., D/B/A Oakmont Care Center, to expire on June 30, 1994.
On or about June 7, 1994, another application was filed in the name of Monarch Nursing Homes, Inc., D/B/A Oakmont Care Center. This application was a
Page 1 2 3 4 Tennessee Personal Injury Attorneys
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