The Ohio Supreme Court has ruled that because Capital Care Network of Toledo violated a 21-year-old rule requiring all ambulatory surgical facilities to have written hospital transfer agreements to facilitate emergency treatment, the Ohio Department of Health was within its rights to revoke the clinic’s operating license.

After the University of Toledo Medical Center declined to renew its transfer agreement with Capital Care in 2013, no such agreement was in place until Capital Care negotiated its 2014 agreement with the University of Michigan Health System, which the Ohio Department of Health (ODH) did not accept under its rule because the Ann Arbor, Michigan, location was too far away to accommodate emergency treatment.

In a majority opinion authored by Justice Terrence O’Donnell and released today, the Court ruled that ODH’s revocation of Capital Care’s health care facility license was supported by “reliable, probative, and substantial evidence and is in accordance with law.” The Court held that lower court rulings overturning ODH’s license revocation were based on claims that Ohio’s 2013 law requiring the transfer agreements violated the facility’s constitutional rights. Justice O’Donnell wrote that those courts did not examine the authority of ODH to revoke the license for violating the rule, and the Supreme Court declined to consider the constitutional issues.

Justices Sharon L. Kennedy, Patrick F. Fischer, and R. Patrick DeWine joined the majority opinion. Justice Judith L. French concurred in a separate written opinion that was joined by Justices Kennedy and DeWine.

Chief Justice Maureen O’Connor dissented with an opinion joined by Justice William M. O’Neill, who resigned on Jan. 26.

Chief Justice O’Connor wrote that Capital Care complied with the ODH rule and that only the statutory provision, newly enacted in 2013, required a transfer agreement with a “local” hospital. She maintained that this addition to the law was the basis for the license revocation and required the Court to consider the clinic’s constitutional challenges. She concluded the new laws were unconstitutional.

Budget Bill Introduces New Transfer Agreement Requirements
Since 1986, ODH regulations have required ambulatory surgical facilities to have written transfer agreements with hospitals to facilitate emergency treatment. ODH has interpreted Adm. Code 3701-83-19(E) to require that the agreement be with a hospital located within a 30-minute transport time.

In 2013, as part of the House Bill 59, the Ohio General Assembly enacted R.C. 3702.303(A), which codified the ODH transfer rule and stated the written transfer agreement be “with a local hospital that specifies an effective procedure for the safe and immediate transfer of patients from the facility to the hospital when medical care beyond the care that can be provided” and when other emergencies arise. The bill also included R.C. 3702.304(A), which allowed the facility to request a variance from the health department if the requirement would cause an undue hardship; would not jeopardize the health and safety of any patient; and have a doctor with admitting privileges at a local hospital who has agreed to provide back-up coverage in case of an emergency.

H.B. 59 also included R.C. 3727.60(B), which prohibits public hospitals from entering into written transfer agreements with facilities performing nontherapeutic abortions or from authorizing a doctor to use the doctor’s staff privileges to support a variance application.

The University of Toledo Medical Center advised Capital Care Network that it would not renew its transfer agreement with Capital Care when the agreement expired in July 2013. ODH asked Capital Care if it had negotiated a new agreement, but the clinic did not respond. The department then inspected the clinic, learned it did not have an agreement, and ODH Director Theodore Wymyslo sent the clinic a notice of intent to revoke Capital Care’s license.

Capital Care Contests Revocation
Because Capital Care requested a hearing on the matter, ODH delayed acting on the director’s notice. The new law requiring the transfer agreement took effect in September 2013, and in February 2014, Wymyslo again issued a notice to revoke Capital Care’s license. By then, Capital Care had secured an agreement with the University of Michigan Health Center in Ann Arbor 52 miles away from the clinic. At a hearing on the revocation, Wymyslo testified the department expected an agreement to be with a hospital that could be reached within a 30-minute transport time, and that the department used the 30-minute standard to approve agreements before and after the passage of the new law.

A department hearing examiner ruled that Capital Care violated the administrative rule by operating for five months without any written transfer agreement and that the new agreement violated R.C. 3702.303(A) because it was not with a local hospital. ODH approved the recommendation and revoked the license.

Capital Care appealed the decision in Lucas County Common Pleas Court. The trial court reversed the decision to revoke its license, concluding that while ODH determined Capital Care did not have a written agreement with a “local” hospital, the new laws about the agreement violated the “single subject” clause of the Ohio Constitution. The trial court also agreed with Capital Care’s argument and ruled that the new statutes acted as an unconstitutional delegation of licensing authority to private entities, and imposed an undue burden on women seeking abortion.

The Sixth District Court of Appeals affirmed the trial court and held that, based on the undue burden standard set forth in the U.S.  Supreme Court’s 2016 Whole Woman’s Health v. Hellerstedt decision, Ohio’s laws requiring clinics to have transfer agreements with local hospitals are unconstitutional. The state appealed to the Supreme Court.

Department Asks Court to Focus on Rule
ODH urged the Court not to address the constitutional violation claims because the agreement with the University of Michigan Health Center does not comply with Adm. Code 3701-83-19(E), and the department provided sufficient evidence to support its finding. Capital Care countered that the health department relied on the new statute, not the rule, to reject the license, and that the new statute imposed the “local hospital” standard while the rule did not.

The majority reviewed testimony indicating that Capital Care could not transport a patient by ambulance to the Michigan hospital within 30 minutes and determined that, while the clinic claimed to have an agreement with a helicopter ambulance, the helicopter would have to travel about an hour from Central Ohio to Toledo to pick up the patient and then fly another 15 minutes to the Michigan hospital.

“In short the evidence plainly established that the Ann Arbor agreement would not allow for the transfer of patients ‘in the event of medical complications, emergency situations, and for other needs as they arise,’” the majority opinion stated.

The Court concluded that because Capital Care operated without a written transfer agreement for five months and currently has no agreement with a hospital that allows for the transfer of patients in the event of emergency situations, it violated the ODH rule, and those violations permitted ODH to revoke Capital Care’s health care facility license.

The majority noted the Sixth District “jumped to constitutional questions” and that the Ohio Supreme Court’s precedent  directs that “this court will not reach constitutional issues unless absolutely necessary.” The Court concluded that “because ODH had authority to revoke Capital Care’s license based on the failure to comply with the administrative rule requiring a written transfer agreement with a nearby hospital, it is not necessary to reach those constitutional issues.”

Dissent Asserts Laws Unconstitutional
In a dissent, Chief Justice O’Connor noted that ODH’s revocation order stated the order was “in accordance with R.C. 3702.32, R.C. 3702.303(A), R.C. Chapter 119, and OAC 3701-83-19(E).” She maintained the majority was mistaken to resolve the case based only on the rule.

“By the time ODH issued its order revoking Capital Care’s license in June 2014, the clinic had obtained a written transfer agreement that ODH’s director rejected for failure to conform to the statute, not for failure to comply with the rule. Thus, the majority must consider the validity of the statutory scheme,” the dissent stated.

Reaching the merits of Capital Care’s challenge to the statutory provisions, the dissent concluded the new requirements were unconstitutional for different reasons.

The dissent concluded “there can be no successful argument that the written-transfer-agreement provisions have a nexus to the biennial budget.” Accordingly, the provisions could not withstand a challenge under the one-subject rule. The dissent noted the goal of the single-subject rule adopted in the 1851 version of the Ohio Constitution was to prevent unrelated “riders,” especially on controversial topics, from being included in unrelated bills as an attempt to secure enough votes for the provisions. The chief justice maintained nothing “about the challenged provisions is germane to the budget bill” in which they were passed.

The dissent also found that, under the U.S. Supreme Court’s Whole Woman’s Health decision, the transfer agreement statutes placed an undue burden on a woman’s ability to access abortion services.

The Whole Woman’s Health decision adopts an earlier U.S. Supreme Court standard that an undue burden exists “if its purpose or effect is to place a substantial obstacle in the path of a woman seeking an abortion before the fetus attains viability.” Whole Woman’s Health established an undue burden test that requires a court to consider the burden the law imposes on abortion access together with the benefits the law confers to determine if the burden is “undue.”

The dissent found the testimony established “that there is no benefit to the written-transfer-agreement provisions for patients in life-threatening situations.” The ODH director conceded that even in his prior private practice, if a patient had an emergency, the clinic would call 911 and the patient would be taken to the nearest hospital. For non-emergency complications, the dissent found “[a]t best, the written-transfer-agreement provisions confer a theoretical benefit.”

At the license revocation hearing, Capital Care witnesses stated that complications or emergency situations are rare. The ODH director testified that, if Capital Care closed, women in northwestern Ohio would have to travel to Columbus or Cleveland to seek an abortion. A Capital Care witness testified that could lead women to seek illegal abortions, which could have several severe consequences, including death.

“Particularly in light of the absence of real benefit conferred by the statutes and the burdens created by the written-transfer-agreement provisions, I would find that the provisions do not confer benefits sufficient to justify the burden. Thus, the laws are unconstitutional,” the dissent concluded.

Lastly, the dissent also agreed with the clinic’s argument that the transfer agreement statutes unconstitutionally delegated state licensing authority to private parties without due process because ODH cannot approve a license without the decisions of private entities, either hospitals or doctors, who qualify under the statutory restrictions. Without private third-party agreement, ODH has no discretion to grant a waiver. The dissent concluded this statutory scheme “permits the legislature to do through private actors what it may not legally do.”

2016-1348. Capital Care Network of Toledo v. Ohio Dept. of Health, Slip Opinion No. 2018-Ohio-440.

View oral argument video of this case.

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