Iowa Wellmark Insurance Sues Hospitals to Stop Building Plan

February 9, 2007

Iowa’s largest health insurance company filed a lawsuit this week to stop three health care organizations from building hospitals without seeking state approval.

Wellmark Inc., widely known as Wellmark Blue Cross and Blue Shield, filed the lawsuit in Polk County District Court against Catholic Health Initiatives Iowa Inc., Central Iowa Hospital Corp., both of Des Moines, and St. Luke’s Jones Regional Medical Center of Anamosa.

The health care companies have proposed closing some hospitals and building replacements that Wellmark says would cost as much as $200 million. The groups have sought to avoid state approval for their projects, claiming that state law allows them to forgo the process if they are renovating an existing hospital or replacing one.

Wellmark, which has 1.8 million insured customers in Iowa and South Dakota, claims it is concerned that the construction of the hospitals could cause health care costs to rise. According to court documents, the insurance company says it isn’t opposed to the hospital projects but wants to ensure there is a public process to review them.

Catholic Health Initiatives, a nonprofit corporation known as Mercy Medical Center, has announced plans to build a 146-bed hospital in West Des Moines and close Mercy Capitol on Des Moines’ east side.

Central Iowa Hospital Corp., known as Iowa Health Systems, which operates Iowa Methodist Medical Center and Iowa Lutheran Hospital in Des Moines, plans to build a 200-bed hospital bordering on Mercy’s planned new hospital. Lutheran Hospital on Des Moines’ east side would close.

St. Luke’s Jones County Regional Medical Center is considering moving from its downtown Anamosa site into a new 25-bed hospital nearby.

Wellmark argues the projects require approval from the Iowa Department of Health if the hospitals add new health services not already provided at other facilities, which the new hospitals would do.

“There are likely to be other substantial differences between the proposed new facilities and the ones proposed to be ‘replaced’ at new locations,” the lawsuit says. “However, the department failed to investigate other potential differences and instead based its decision solely on unsupported assertions provided by the hospitals.”

Wellmark asks the court to order the Iowa Department of Public Health to require a certificate of need for the three hospitals or any one or two of them. It also seeks to have the exemption rule _ which the health department passed in 2005 _ declared unlawful. The rule expands on a state law passed in 1997, exempting from review a new hospital if it replaces an existing facility in the same county.

The lawsuit also asks for a permanent injunction prohibiting the hospitals from offering or developing new hospitals without obtaining a certificate of need from the health department.

Joe LeValley, Mercy Medical Center’s senior vice president for planning, said it’s disappointing that Wellmark is opposing the project.

He said Mercy has followed the state law, and the Health Facilities Council unanimously agreed that the new hospital plan follows the law.

“We’re very confident in our position, but even more importantly we believe with all our hearts we’re doing the right thing for the right reasons,” he said.

Updating the aging Mercy Capitol hospital would take tens of millions of dollars, which he said is not a good use of health care dollars. Building a replacement just 18 blocks from Mercy’s main hospital didn’t make sense, so the decision was made to locate a new facility in West Des Moines.

Iowa Methodist spokeswoman Jennifer Perry said the hospital’s legal team had not yet received the lawsuit and couldn’t immediately comment Wednesday.

St. Luke’s Jones County Regional Medical Center representatives did not immediately return calls seeking comment Wednesday afternoon.

Was this article valuable?

Here are more articles you may enjoy.