Merit Decision: Court Ok’s License Revocation of Toledo Abortion Clinic. Capital Care Network of Toledo v. Dept. of Health.

Update: On February 12, 2018, at a special meeting, the Board of Trustees of ProMedica Toledo Hospital authorized ProMedica to enter into a written transfer agreement with Capital Care Network.

On February 6, 2018, the Supreme Court of Ohio handed down a merit decision in Capital Care Network of Toledo v. Dept. of Health, Slip Opinion No. 2018-Ohio-440. (According to the Reporter’s Note, the case was actually decided on January 24, 2018, while Justice O’Neill was still on the Court, but released on February 6, 2018, after O’Neill had left the Court.) In an opinion written by Justice O’Donnell, joined by Justices Kennedy, Fischer, and DeWine, the Court held the license of the Toledo abortion clinic was properly revoked by the Ohio Department of Health for failure to have an appropriate written transfer agreement with a hospital.  Justice French agreed with that, and wrote a separate concurrence, joined by Justices Kennedy and DeWine, addressing (and rejecting) the single subject constitutional challenge. Chief Justice O’Connor wrote a long dissent, joined by Justice O’Neill.  The case was argued September 12, 2017.

Case Background

Ohio Administrative Code 3701-83-19(E) requires all ambulatory surgical facilities in Ohio to have a written transfer agreement with a hospital in case of emergencies. The Ohio Department of Health (“ODH”) has interpreted that rule to mean a hospital within 30 minutes of the facility. The regulations also authorize ODH to grant a waiver or variance from any safety requirement established in this chapter unless the requirement is statutorily mandated.

In 2013, the legislature codified the rule at R.C. 3702.303(A), adding the requirement that the transfer agreement be with a local hospital. The statute also allows the ODH director to grant a variance under certain conditions, as further set forth in R.C. 3702.304, including a back-up agreement with a doctor with admitting privileges at a local hospital.  At the same time, R.C. 3727.60(B) was enacted, which prohibits public hospitals from entering into written transfer agreements with facilities that perform abortions, or from authorizing a doctor to use the doctor’s staff privileges to support a variance application.

Appellee, Capital Care Network of Toledo (“Capital Care”) is an ambulatory surgical facility that performs abortions, among other services. Capital Care had a written transfer agreement with the University of Toledo Medical Center, but in April of 2013, the University advised Capital Care that the agreement, which expired July 31, 2013, would not be renewed.  On July 30, 2013, ODH inquired about the status of Capital Care’s transfer agreement; the clinic did not respond. After inspecting the clinic and learning of the lack of a written transfer agreement, on August 2, 2013, then-ODH Director Dr. Theodore Wymyslo, issued a notice of intent to revoke and refuse to renew the clinic’s license.  Capital Care requested a hearing, which was granted, but continued at the Director’s request.

Capital Care operated without any written transfer agreement until January 20, 2014, when it entered into a new one with the University of Michigan Health System in Ann Arbor, 52 miles away.  On February 18, 2014, the Director issued a second notice of intent to revoke and not renew Capital Care’s license because of the statutory requirement that the written transfer agreement be with a local hospital.

An administrative hearing was held, on both the 2013 and 2014 revocation notices.  The hearing examiner found that the operation of the clinic for five months with no written transfer agreement violated the rule, and that the Michigan written transfer agreement violated the statute because it was not with a local hospital. The then-Interim Director of ODH approved the report of the hearing examiner, and issued an adjudication order July 29, 2014, revoking Capital Care’s license, based on its violation of R.C. 3702.303(A) and O.A.C 3701-83-19(E).

Capital Care filed an administrative appeal to the Lucas County Court of Common Pleas, which reversed the license revocation, finding R.C. 3702.303(A), R.C. 3702.304, and R.C. 3727. 60(B) unconstitutional and the revocation contrary to law. The Sixth District Court of Appeals affirmed the lower court, holding that the licensing provisions at issue violated the Ohio Constitution’s single-subject provision, were an unlawful delegation of the state’s licensing authority, and constituted an undue burden on a woman’s right to obtain an abortion.

Read the oral argument preview of the case here and an analysis of the argument here.

Key Precedent

Ohio Constitution, Article II, Section 15 (D)

(“No bill shall contain more than one subject, which shall be clearly expressed in its title. No law shall be revived or amended unless the new act contains the entire act revived, or the section or sections amended, and the section or sections amended shall be repealed.”)

O.A.C. 3701-83-05.1(C)(2) (“If the director determines that the HCF is not complying with any provision of section 3702.30 of the Revised Code . . . the director may do any or all of the following :

(2) Revoke, suspend, or refuse to renew the license[.]”)

O.A.C. 3701-83-14(A) (“The director may grant a variance or waiver from any building or safety requirement established by Chapter 3701-83 of the Administrative Code, unless the requirement is mandated by statute.”)

O.A.C. 3701-83-19(E) (Written transfer agreement rule)

(“Each ASF shall have a written transfer agreement with a hospital for transfer of patients in the event of medical complications, emergency situations, and for other needs as they arise.”)

R.C. 3702.303 (Written transfer agreement statute)

(“(A) Except as provided in division (C) of this section, an ambulatory surgical facility shall have a written transfer agreement 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 at the ambulatory surgical facility is necessary, including when emergency situations occur or medical complications arise. A copy of the agreement shall be filed with the director of health.)

(C) The requirement for a written transfer agreement between an ambulatory surgical facility and a hospital does not apply if either of the following is the case:

(2) The director of health has, pursuant to the procedure specified in section 3702.304 of the Revised Code, granted the facility a variance from the requirement.”)

R.C. 3702.304 (Variance statute) (sets forth requirements to obtain variance from written transfer agreement.)

R.C. 3727.60 (B) (public hospital provision) (forbids any public hospital from entering into a written transfer agreement with an abortion clinic and forbids any public hospital from allowing any physician with staff privileges to use those privileges to enable an abortion clinic in getting a variance.)

R.C. 119.12(M)(court may affirm an order of an administrative agency if the order is supported by reliable, probative, and substantial evidence and is in accordance with law.)

Pim v. Nicholson, 6 Ohio St. 176 (1856) (finding single subject provision to be directory only, relating to bills, not acts.)

Carter v. Carter Coal Co., 298 U.S. 238 (1936)  (applying nondelegation doctrine “to prevent the legislature from vesting state authority in private actors not constrained by the due process clause.”)

University of Cincinnati v. Conrad, 63 Ohio St.2d 108 (1980) (An administrative appeal to the common pleas court does not provide a trial de novo.)

State ex rel. Dix v. Celeste, 11 Ohio St.3d 141 (1984) (“by holding that the one-subject rule is directory and not mandatory, judicial interference with legislative action is reduced.”)

Redman v. Ohio Dept. of Indus. Relations, 75 Ohio St.3d 399 (1996) (“A statute does not unconstitutionally delegate legislative power if it establishes, through legislative policy and such standards as are practical, an intelligible principle to which the administrative officer or body must conform and further establishes a procedure whereby exercise of the discretion can be reviewed effectively.”)

Beagle v. Walden, 78 Ohio St.3d 59 (1997) (“In order to find a legislative enactment violative of the one-subject rule, a court must determine that various topics contained therein lack a common purpose or relationship so that there is no discernible practical, rational or legitimate reason for combining the provisions in one Act.”)

In re Nowak, 2004-Ohio-6777 (“[t]he proposition that the one-subject rule is both directory and potentially capable of being applied by the court to invalidate a law is essentially an oxymoron.”)

Women’s Med. Prof’l Corp. v. Baird, 438 F.3d 595 (6th Cir. 2006) (A trial court must make factual findings of an undue burden. Further, the Ohio Department of Health Director’s ability to issue a waiver eliminates the possibility of a third-party veto and an unlawful delegation of authority.)

State ex rel. Ohio Civ. Serv. Emps. Assn. v. State, 2016-Ohio-478 (The single-subject rule is intended to prevent logrolling. However, separation of powers requires deference to the General Assembly by liberally interpreting the term “subject”.)

Whole Woman’s Health v. Hellerstedt, 136 S. Ct. 2292 (2016) (Requiring abortion facilities to meet governmental standards that do not promote patient health is an undue burden. Further, the resulting need for women to travel long distances for abortions is an undue burden.)

Position of the Parties

Justice O’Donnell likes to give the positions of the parties in his opinions, so here they are.

ODH argues the court need not address any constitutional issues in the case because the Michigan transfer agreement does not comply with O.A.C. 3701-83-19(E), so the revocation order was supported by reliable, probative and substantial evidence, and is in accordance with law. This is the position the majority ultimately takes.  ODH argues that if the constitutional arguments are addressed, the statutory provisions do not violate the Ohio Constitution’s single-subject provision, are not an unlawful delegation of the state’s licensing authority and do not constituted an undue burden on a woman’s right to obtain an abortion.

Capital Care argues the ODH relied solely on the statute, not the rule, to invalidate its Michigan written transfer agreement. It argues the rule and the statute impose different standards, but only the statute requires the transfer agreement to be with a local hospital. It met the rule by providing emergency transfers via 911, and non-emergency transfers via arrangement with a helicopter service (which admittedly it did not have) or ground transport.  Had the Clinic known its agreement needed to comply with the rule, in addition to the statute, it would have sought a waiver or variance, Finally, the Clinic argues the licensing provisions at issue violated the Ohio Constitution’s single-subject provision, were an unlawful delegation of the state’s licensing authority and constituted an undue burden on a woman’s right to obtain an abortion.

Merit Decision

Executive Summary

The ODH had the power to revoke Capital Care’s license on the administrative rule alone, which required a written transfer agreement with a nearby hospital. The decision of the director to do so was substantiated by reliable, probative, and substantial evidence and is in accordance with law. Unnecessary to decide the constitutional issues.

Analysis of Majority Decision

First, the all important standard of review of an administrative appeal to a common pleas court. The order will be affirmed if it is supported by reliable, probative, and substantial evidence and is in accordance with law. This one was.

Clinic Fails to Comply with the Rule

Both before and after the enactment of the written transfer agreement statute, the director of ODH interpreted the rule, O.A.C. 3701-83-19(E), to require that written transfer agreements be with a hospital within a 30-minute transport from the facility, for safety reasons in an emergency. The Clinic’s written transfer agreement with an Ann Arbor Hospital did not meet that requirement.

The majority also rejected Capital Care’s argument that deciding this case based on the rule violated due process, because had it known this was a rule violation matter, it would have sought a variance or waiver of the rule’s written transfer agreement. The majority found that since the Clinic believed and argued it had complied with the rule, it had no need to seek a waiver or a variance, (even during the time it operated without any agreement) so it was not denied the opportunity to do so.

So, Capital Care’s license was properly revoked based on the administrative rule alone, meaning there is no need to address the constitutionally of the written transfer agreement statute, the public hospital ban statute, or the statutory variance provisions. The court of appeals should not have done so, as there was no need to.

Justice French and the Single Subject Rule

Justice French agrees that Capital Care’s license was properly revoked based on the regulation alone, and therefore the constitutional issues did not need to be addressed. But she wrote separately to challenge the dissent’s contention that the statute violated the Ohio Constitution’s single-subject rule.

French, to her credit, does like to dig in and do some real historical analysis in state constitutional challenges. Shortly after the enactment of the one-subject provision into the state constitution, the court issued a decision in Pim v. Nicholson, 6 Ohio St. 176 (1856), holding that the provision was directory, not mandatory. French notes that the author of the decision, Judge Joseph Swan, served as a delegate to the 1850-51 delegation.  Why am I telling you all this?  Just wait, for the dissent.  In any case, after much debate at the 1873-74 constitutional convention, no changes were made to the provision, and none has been made since, except to move it from one section to another. But to French, the point is, that the provision imposed a limitation on bills, not acts, and the legislature, not the judiciary was to enforce it.

French thinks that over the years the court has turned away from the limiting principle that the judiciary should not interfere with legislative action. She declines to take sides over whether the single-subject provision is directory or mandatory (although her preference is pretty clear), she does think there has been too much “judicial overreach” in recent years. The legislature may have legitimate reasons for combining topics in a large bill that pertains to a broad subject, “…a subject that might appear disjointed from a judicial perspective, but that would serve legislative goals of cohesion, order, or improvement,” she wrote.

Only Justices Kennedy and DeWine joined this concurrence. So its interpretation of the single-subject provision does not presently represent a majority viewpoint.

THE Dissent

Yep, it’s a doozy. 81 out of the 131 paragraphs of the opinion. Authored by Chief Justice O’Connor, and joined by then-Justice O’Neill.

Dissent Summary

The Clinic’s transfer agreement complied with the regulations, so the constitutionality of the written transfer agreement statutes must be examined. The dissent finds they violate the single-subject rule, are an unlawful delegation of the state’s licensing authority and constituted an undue burden on a woman’s right to obtain an abortion.

Basis of License Revocation

Chief Justice O’Connor begins by disagreeing with the majority that the license revocation was just based on the rule, not the statute. She quotes the revocation order, which was “in accordance with R.C. 3702.32, R.C. 3702.303(A), R.C. Chapter 119, and OAC 3701-83-19(E).” That puts both the rule and the statutes into play.

The first proposed license revocation letter sent by ODH on August 2, 2013 cited a violation of the administrative code. But no hearing was scheduled on that proposed revocation until February 18, 2014, by which time Capital Care had obtained a written transfer agreement with the University of Michigan.

ODH’s second letter of proposed revocation, dated February 18, 2014, cited violations of both the rule and the statute, specifically referencing the statutory requirement that the written transfer agreement be with a local hospital, and identifying the University of Michigan agreement as violating the local requirement, which is just in the statute, not the rule. The Chief noted that even at the administrative hearing, the director did not state that the transfer agreement with Michigan violated the rule.

“I decline to accept the state’s post hoc rationalization that the license revocation was based on the rule when the director still had a question whether that basis would have been sufficient,” wrote the Chief.

In short, the revocation was based on failure to meet the statute, not the rule. So, the constitutionality of the statutory scheme is in play.

Buried in the Budget Bill

The three sections of the bill at issue here, the written transfer agreement, the public hospital ban and the variance provisions, were three pages of a 3500 page budget bill. The Chief spends a lot of time on this.

All Three Statutes Were Properly Challenged

The state argued Capital Care challenged only R.C. 3702.303, not R.C. 3702.304 or R.C. 3727.60. Not so, says the Chief.  Capital Care didn’t need to challenge the constitutionality of the statutes at the administrative hearing because a hearing examiner can’t determine the constitutionality of statutes. And although Capital Care wasn’t explicit about the scope of its single-subject challenge on appeal to the trial court, its arguments, referencing transfer agreement provisions (plural), put the state on notice that all three statutes were in play, and they still are. And the state never argued otherwise until it got to the Supreme Court of Ohio.

A Different View of the History of the Single-Subject Rule

The Chief views this provision differently from Justice French.

The single-subject rule, first imposed in 1851, was part of a general distrust of legislative power. Its purpose was to prevent logrolling. And as for Justice Swan, author of the decision saying the rule was directory, despite the word “shall”, well, seems he was absent the day the convention added the provision to the state constitution! And furthermore, the 1977 Ohio Constitutional Revision Commission, tasked with making recommendations for proposed Constitutional amendments, retained the single-subject provision.

So. “[F]or more than 30 years, this court has respected the General Assembly’s power to make laws while at the same time refusing to ‘abdicate in its duty to enforce the Ohio Constitution,’” wrote O’Connor, noting that having more than one topic in a bill is not fatal, as long as a common purpose exists between the topics. She gives a number of examples of some that did and some that didn’t.

The state argued that the single-subject rule was not violated because the three provisions fell within the budget bill’s purpose “of making operating appropriations and setting conditions for efficient and effective operations of state government.” The dissent rejects this argument, for lack of evidence. Nor does the dissent believe the state showed the requisite nexus to the budget bill. And, just as she seemed to be at oral argument, the Chief was disdainful of the “nexus” of “greater order or cohesion” or “improvement” as single subject justifications.

Bottom Line on Single-Subject Provision

All three statutes violate it.

Undue Burden

The dissent notes that while the state argued the court should not consider this argument, it was the state itself which raised the issue to the Sixth District, and again, to the Supreme Court of Ohio. Furthermore, no court can simply ignore a new decision from the U.S. Supreme Court, so the Sixth District was absolutely correct in considering the impact of Whole Woman’s Health on the case, which was released while the appeal was pending. So the state cannot cry foul about this issue.

Whole Woman’s Health Applies

The dissent rejects the state’s argument that the undue-burden standard does not apply to laws, like these, that don’t directly target abortion clinics, going into detail about how that argument is specifically repudiated by Whole Woman’s Health, which did not limit the undue-burden standard to abortion-specific laws, and thus applies to this case.

There is Enough Evidence in the Record to Conduct an Undue-Burden Analysis

The dissent notes that counsel for the Clinic was permitted to make a record on this, over the state’s objection, at the license-revocation hearing.

The Chief makes the following points after a review of the record. In the case of an emergency, first responders take the patient to the nearest hospital, written transfer agreement or no.  Otherwise, the patient goes where she wants.  So, “the benefit of a written transfer agreement appears to be only theoretical,” wrote O’Connor. And, more important, complications or emergencies are virtually nonexistent.  In eight years, Capital Care never needed to transfer a patient to the hospital.

Without a written transfer agreement or a variance application, the state can’t waive the license requirement, so the Clinic is going to have to close. The Clinic’s owner testified that she had contacted more than ten hospitals and several doctors, to get a transfer agreement or variance, to no avail.

Bottom line here: the limited and speculative benefits of these transfer agreements are not enough to justify the burdens on access to abortion services caused by the statutes. Enforcing them will cause the last abortion clinic in Northwestern Ohio to close. Any benefits conferred by the statutes are far outweighed by the burdens. The written transfer agreement statutes are unconstitutional on undue burden grounds.

Unlawful Delegation of State’s Licensing Power to Private Actors

Lastly, the dissent agrees that written transfer agreement statute and the variance statute unlawfully delegate the state’s licensing power to private actors.

The nondelegation doctrine has a long history in constitutional law. It isn’t dead until the U.S. Supreme Court says it is, and it hasn’t. At least eight federal courts have applied this doctrine to regulations and statutes governing abortion since Roe v. Wade was decided, and the dissent reviews some of those decisions in detail.

Baird

In 2006, in Women’s Med. Prof’l Corp. v. Baird, the Sixth Circuit Court of Appeals upheld Ohio’s written- transfer-agreement regulations because the director of ODH kept the power to grant a waiver of the transfer agreement requirement.  The state argues the Supreme Court of Ohio should reach the same conclusion, but the dissent does not, because of a crucial difference between the regulation and the statute.

Regulation and Statute Differ

Under the regulation, the director retains the power to grant a waiver or variance from any building or safety requirement if the director finds the requirement has been met in an alternative manner, or strict application of the requirement would cause an undue hardship and a waiver would not jeopardize the health and safety of any patient. But under R.C. 3702.303(C)(2), the director can only grant a variance if an ambulatory service facility submits an agreement signed by a facility and one or more doctors with admitting privileges who agree to provide back-up coverage. R.C. 3727.60 (B) adds additional restrictions not found in the regulations by forbidding public hospitals from entering into transfer agreements with abortion clinics and forbidding doctors at those hospitals from using their privileges to help abortion clinics get a variance. Thus, the ability of the director to grant a variance is different under the statutory scheme than it is under the regulatory scheme, because it is dependent on action by a private actor. That makes all the difference. Therefore, R.C. 3702.303 and R.C. 3702.304  “unconstitutionally delegate state licensing authority to private actors without the barest concern for due process.”  Nor can the offending provisions be severed, so they must be invalidated, which also renders R.C. 3727.60 meaningless.

Case Syllabus

The order of the Ohio Department of Health revoking the health care facility license of Capital Care Network of Toledo is supported by reliable, probative, and substantial evidence and is in accordance with law because Capital Care operated without a written transfer agreement for a period of five months and its subsequent agreement with the University of Michigan does not satisfy the Ohio Administrative Code requirement to establish and maintain written transfer agreements for patients in emergency situations.

Concluding Observations

As I previously disclosed, I was a paid consultant by Capital Care in its Supreme Court of Ohio appeal. And consultant or no, I am totally biased in favor of Capital Care in this case, and would personally like to thank Chief Justice O’Connor for her incredibly thoughtful, well-researched, and just dissenting opinion. She has said everything I could say here, and I applaud her for her resolution of the constitutional issues.

That said, I thought Capital Care would likely lose this case. Among other things, after argument, I wrote,

“I think Chief Justice O’Connor and Justice O’Neill are ready to buy the Clinic’s argument that the written transfer agreement statute is unconstitutional, but whether anyone else is on board is dubious. Justices French and DeWine seemed totally unsympathetic to the Clinic’s argument, and Justice Kennedy, who was asked to recuse from this case because of the timing of a speech she gave at a Greater Toledo Right to Life Breakfast, refused to do so, and clearly isn’t going to support the Clinic here.  Justice O’Donnell asked mostly clarifying questions, but never has been sympathetic to abortion rights.”

One more thing.  As for that period in which the Clinic had no written transfer agreement at all, I wrote, “the state admitted that it isn’t holding noncompliance during the gap period against the Clinic, but I’m not so sure how clearly some of the justices heard that. If a majority decides that the license was revoked because of noncompliance with the rule during that gap period, then I don’t see the point of why the Court agreed to hear this case at all. Furthermore, the trial court specifically found that the gap period was not a basis for the license revocation.”

It also strikes me as a bit odd that given the fact that the court seems rarely to be using syllabi in cases anymore, that this case has one, which seems to apply specifically to this case alone.

 

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